Australia: Australian universities' potential liability for courses that fail to deliver

In brief - Educational negligence claims in Australia, how likely are they?

In Australia, a successful claim by a student for compensation for careless or incompetent teaching practices may well be just a matter of time. Universities should consider taking steps to mitigate their risk against such claims.

Competition and deregulation are impacting the Australian education sector

Education is big business. Figures released from the Australian Bureau of Statistics show that the industry grew by more than $2 billion in 2015 and is our biggest service export, with income reaching a record high of $19.2 billion in 2015.

The education sector is also increasingly competitive. Deregulation has meant that Australian universities have had to become more and more financially self-reliant, due to a persistent and gradual decrease in government funding. Universities aggressively compete with each other to attract the best students locally and overseas, using glossy marketing schemes and increasing places in popular courses to obtain enrolments. An article in The Age newspaper on 13 August 2016 highlighted the issue of funding in universities and reported that many institutions are funnelling students into more profitable courses such as law degrees (which have high fees but are relatively cheap to run) so as to subsidise research or more expensive courses such as veterinary science.

Does the drive to attract more students and make more money have an impact on the quality of the courses on offer at universities? Do students expect more from courses and are they more inclined to initiate legal action against the university if they consider that the course is inadequate or not as promised?

Common sense dictates that this is the case, which brings into focus the potential liability of universities in respect of actions brought by dissatisfied students. In Australia, no-one has successfully pursued a case in educational negligence but this is only a matter of time given the educational climate described above.

In the United States and the United Kingdom, the liability of educators for inadequate teaching has centred on two main causes of action: negligence and misrepresentation. In Australia, there is no decided case involving an action in educational negligence, and very little in the way of misrepresentation, but there is the real prospect of claims against universities in accordance with established principles, as summarised below.

Educational malpractice claims consistently denied by US courts, but for how long?

Historically, educators have not been included in the ranks of other professionals such as lawyers, doctors and accountants who have always been susceptible to a claim for damages if their professional services did not meet the expected standard of care.

In the United States, courts have taken the view that for reasons of public policy (the fear of "flood of litigation" and overburdening the schools) and the alleged difficulty in setting an appropriate standard of care in teaching, in establishing causation and framing an appropriate measure of damages, claims for "educational malpractice" should be denied. A number of actions were brought for educational malpractice in the 1970s (see Peter W v San Francisco Unified District., 60 Cal. App. 3d 814, 131 Cal. Rptr. 854, 859 (Ct. App. 1976) and Donohue v. Copiague Union Free School Dist., 391 N.E.2d 1352) which were consistently denied by the courts and this view has continued to recent times (see Gomez-Jimines v. New York Law Sch., No. 652226/11 (N.Y Sup Ct. Mar. 21. 2012); Love v. Career Educ. Corp., 2012 WL 1684572 (E.D. Mo. May 15, 2012).

Interestingly, on 20 November 2016, an announcement was made that US President-elect, Donald Trump has agreed to settle lawsuits related to his Trump University for USD $25 million. The suits alleged that the real estate-related seminars failed to deliver the education they promised. Whilst Mr Trump tweeted after the news of the settlement that he would have prevailed in a court proceeding, it perhaps indicates a changing legal climate in this area going forward.

Negligence claims in UK show steady growth, particularly against schools offering facilities for special needs children

In the United Kingdom, a different approach has been taken. In the landmark House of Lords case in Phelps v Hillingdon London Borough Council; Anderton v Clwyd County Council; Gower v Bromley London Borough Council; Jarvis v Hampshire County Council [2000] UKHL 47 (these were a number of cases that were very similar in substance so were heard together by the House of Lords), the Court held unanimously that claims for educational negligence could be brought. In the Phelps case the plaintiff sued the local education authority and the educational psychologist for failure to diagnose her dyslexia when she was at school. As a result she was never put into an appropriate learning program, so by the time she was an adult and had left school, her reading skills were that of a young child. She was therefore unable to obtain gainful employment in her adult years. The House of Lords found that there was a direct duty of care between the educational psychologist and the plaintiff because the psychologist was specifically asked to give advice on the child's needs and make recommendations which she understood would be followed by the parents and the school. In addition, the local education authority was vicariously liable for the breach of duty of care of the psychologist. In contrast to the US courts, the House of Lords held that public policy grounds should not prevent such claims.

It is to be observed that allowing such claims in the UK has not resulted in opening the floodgates but rather a steady growth in educational negligence claims, primarily against schools and in the context of affording particular facilities to children with special needs. The cases are still very hard to prove because of the difficulty in establishing a causal link between the breach of the duty of care and the consequential loss. Interestingly, a judgment is expected later this month from the High Court with respect to a claim made by a graduate against Oxford University for 1 million pounds. The graduate is alleging that the negligent teaching of a particular subject he took in 1999-2000 pulled down his overall grade and cost him first class honours. He further argues that his life and career have been blighted by his failure to obtain a first when he graduated in 2000. If the graduate is successful it will significantly broaden the scope of educational negligence cases that have been permitted in the UK courts to date.

Negligence claims in Australia are increasingly likely to affect schools and universities

In Australia there are no reported decisions. However, across a number of different professions, there has been an increasing legal accountability for the careless performance of professional work. Schools have an established duty of care to their students to protect their physical well being and it is possible the courts could apply similar principles to a claim for compensation by a university student who has been the victim of careless or incompetent teaching practices in breach of a duty of care to the requisite professional standard.

In such an action for negligence, the student would have to establish to the satisfaction of the court the following elements:

  1. the student was owed a duty of care by the educator
  2. that the education provided failed to meet the appropriate standard of care, and
  3. that failure caused the student to suffer injury of a type that is compensable under the usual principles

Determining whether a duty of care is owed to a student by the educator

One challenging issue will be whether the courts are prepared to find that a duty of care is owed to students by university educators where a student suffers pure economic loss (rather than physical injury or damage to property) as a result of a poorly taught course. Depending on the circumstances, the loss could be the course fees and perhaps lost or diminished job opportunities. For a duty of care to be established, damage to the plaintiff of the kind suffered should be reasonably foreseeable (see Donoghue v Stevenson [1932] UKHL 100). The inquiry involves consideration of what a reasonable person in the position of the defendant would have foreseen as potential outcomes connected with his or her (or in the context of a university, its) behaviour.

Australian courts have found that there are three key issues that need to be considered in imposing a duty of care in a case involving economic loss:

  1. vulnerability of the plaintiff
  2. indeterminacy of liability
  3. the defendant's knowledge of the risk that the conduct will cause harm to the plaintiff

1. Vulnerability of the plaintiff

What is meant by the vulnerability of the plaintiff was described by the majority of the High Court in Woolcock Street Investments Pty Ltd v CDG Pty Ltd [2004] HCA 16 as follows:

'Vulnerability', in this context, is not to be understood as meaning only that the plaintiff was likely to suffer damage if reasonable care was not taken. Rather, 'vulnerability' is to be understood as a reference to the plaintiff's inability to protect itself from the consequences of the defendant's want of reasonable care, either entirely or at least in a way which would cast the consequences of loss on the defendant.

It was also observed in Woolcock that an assumption of responsibility for the plaintiff by the defendant and knowledge by the defendant that the plaintiff is relying on the defendant may be part of, or an indicator of, the plaintiff's vulnerability (It does not appear to be necessary to plead and prove that the defendant had knowledge of the plaintiff's vulnerability: Reichel v Paulyn Investments Pty Ltd [2008] VSC 413.) The defendant's control over the plaintiff's circumstances may also be a consideration. The degree and nature of vulnerability required, however, will vary depending on the circumstances of the particular case.

It would not be difficult to argue that a student is dependent upon the university to provide the course up to a reasonable standard so that the student acquires the necessary skills to go into the market place and obtain employment. The university has a large amount of control over the dispensation of knowledge via provision of the course and subject to the student being required to do work experience or research as part of the course, the student's sole source of learning is via the course provided by the university and it would have knowledge of this fact.

However, it is important to note that:

While vulnerability is an important factor in whether or not a duty of care to guard against economic loss is owed, it is not the sole consideration. On current jurisprudence, the decision that a duty of care is owed or is not owed is arrived at in novel circumstances upon a "multi-factorial" approach, with close analysis of the facts bearing on the relationship between the plaintiff and the defendant and regard to "salient features"... (See Western Districts Developments Pty Ltd v Baulkham Hills Shire Council [2009] NSWCA 283 at [10].)

2. Indeterminacy of liability

On the question of indeterminacy of liability (being "liability in an indeterminate amount for an indeterminate time to an indeterminable class", Ultramares Corp v Touche, Niven & Co 174 NE 441 (1931)), it has been noted:
..it is not the size or number of claims that is decisive in determining whether potential liability is so indeterminate that no duty of care is owed. Liability is indeterminate only when it cannot be realistically calculated. If both the likely number of claims and the nature of them can be reasonably calculated, it cannot be said that imposing a duty on the defendant will render that person liable "in an indeterminate amount for an indeterminate time to an indeterminate class". (Perre v Apand [1999] HCA 36 at [107])

In respect of a university student, it should be relatively straightforward to calculate the loss as the course fees. If the student was to argue that it affected his or her job prospects, the liability becomes more difficult to assess.

3. Defendant's knowledge of the risk

As to the issue of the defendant's knowledge of the risk that the conduct will cause harm to the plaintiff, the likelihood in succeeding will be greater if the defendant actually knew of the risk.

What is the appropriate standard of care?

If a duty of care exists, another unresolved issue is the appropriate standard of care. Education and what it means in any given context can be subjective and fact-specific: subjects can be taught in so many different ways, applying different educational theories and beliefs for different courses and students. For example, in E (a minor) v. Dorset County Council & Other Appeals [1994] 4 ALL ER 640, the English Court of Appeal described the applicable standard of care of teachers as one consistent with their skilled calling, requiring them to show reasonable care and skill befitting their professional experience and qualifications. This case referred to school teachers - not university lecturers, but the principles are similar.

Did the failure to exercise the duty cause the loss?

Another potentially difficult issue will be ascertaining whether the damage suffered by a student was caused by a breach of duty of care. For example, in the university context, the impact of a poorly taught subject or course on a student's abilities or job prospects or to carry out future work may be difficult to ascertain amongst a number of other possible conditions or causes. There could be a myriad of different reasons to explain diminished abilities or prospects.

Misrepresentation and actions for misleading or deceptive conduct, or breach of contract

An alternative cause of action for students may be misrepresentation at common law, or its statutory analogue, misleading or deceptive conduct.

At common law, an actionable misrepresentation may be a written or verbal statement made by the university which takes the form of information or advice and is either fraudulent, negligent or innocently inaccurate and induces a person to take a certain course of action. A misrepresentation may take effect as an implied term of a contract or even a collateral contract.

Potentially, in the university context, a misrepresentation could concern matters such as class sizes, details of assessment, timetables, supervision, grading, the suitability of a course as a qualification to enter a particular profession or to equip a student with particular skills and prospects. The student might argue that the effect of the misrepresentation is a breach of contract and the remedy would generally be rescission of the contract with the scope to argue for damages under common law being limited to fraudulent misrepresentation.

There is wider scope to claim damages and other relief under consumer protection legislation such as the Competition and Consumer Act 2010 (Cth) and the equivalent Fair Trading Acts in the states. There are various causes of action under the legislation which could potentially apply, for example, an action for misleading or deceptive conduct or breach of contract. Additionally, some states and territories have legislation specifically targeting misrepresentation and providing a statutory claim for damages to the representee.

Tips for universities to minimise risk of negligence and misrepresentation claims

The proliferation of university courses, the desire to attract students, the perception of universities as purveyors of courses for a fee and the modern condition of litigating all create conditions which are ripe for possible claims against universities by students dissatisfied with their courses. As analysed in this article, although there have been few decided cases to date, there is the potential for universities to be sued and be held liable in negligence and misrepresentation in accordance with established principles.

In order to minimise the risks outlined above, some practical tips for universities to adopt are as follows:

  • carefully checking all marketing material to ensure that there are no "over blown" statements regarding courses and future job prospects
  • ensuring that each faculty is well managed and that staff are always supported so that courses run smoothly and on time
  • having in place good quality control procedures with respect to staff and course materials
  • carrying out random supervision of lectures to ensure that they are being delivered at the expected standard
  • obtaining feedback from students during or at the completion of a subject
  • communicating with staff members to ensure that they feel adequately supported
  • having back up plans when staff members are ill or on leave for extended periods

Caroline Cohen
Education law
Colin Biggers & Paisley

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.