Duty of Care.

DUTY OF CARE

In order to establish negligence, the following had to be proved –

There was a duty owed to the claimant.
The duty was breached.
The claimant suffered damages as a result.

The ‘Neighbor’ principle enunciated by Lord Atkins in Donoghue v Stevenson (1932) indicated to whom duty is owed and laid the principle for the modern tort of negligence. He said:

‘The rule of law that you are to love your neighbor becomes in law, you must not injure your neighbor; and the lawyer’s question, who is my neighbor? Receives a restricted reply. You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be like to injure your neighbor. The answers seems to be – persons who are so closely and directly affected by my act that I ought to reasonably to have them in contemplation as being so affected when I am directing my mind to the acts or omissions which are called in question’.………’the proximity be not confined to mere physical proximity but be used as ….to extend to such close and direct relations that the act complained of directly affects a person whom the person alleged to be bound to take care would know would be directly affected by his careless act…’

Grant v Australian Knitting Mills Ltd [1936] UKPC

Donoghue was ratified and furthered. It held that –

Essential question was not if the product could be examined and if so, does it remove liability from the manufacturer. Privy Council ruled that even if the product is observable, the question is whether the product reached the consumer subject to the same defect it had left the manufacturer.
On the question, if the defect might have been discovered, preclude the imposition of a duty of care on the manufacturer, it is implied from the Grant case that, that depends on ‘the reasonable possibility of intermediate examination’. In a later case, it was further ruled that liability may still arise when there is reasonable possibility of inspecting the goods (Griffith’s v Arch Engineering Co Ltd [1968]. And it was stated that the possibility of intermediate examination goes to the question of causation rather than to the existence of a duty.

The negligence concept was altered in Anns v Merton London Borough Council [1978].

It was said that in order to establish that a duty of care has been held to exist in a particular situation, it is not necessary to bring the facts of that situation within those of previous situations in which a duty of care has been held to exist.

It provided for a 2 stage test –

Whether, as between the alleged wrongdoer and the person who suffered damage, there is sufficient relationship of proximity or neighborhood such that, in reasonable contemplation of the former, carelessness on his part may be likely to cause damage to the latter, in which case a prima facie duty of care arises.
If the first is answered affirmatively, it is necessary to consider whether there are any considerations which ought to negative or reduce or limit the scope of the duty or class of persons to whom it is owed or the damages to which a breech of it may give rise.

However, the test was heavily criticized. And subsequently, not used.

Caparo Industries plc v Dickman [1990]

Caparo bought shares in a public company based on negligently audited accounts showing profit. The HoL held that the auditors did not owe a duty of care to the claimants.

This case provide or a new 3 stage test.

Duty of care is held to exist when -

There is foreseeability of damage.

The test of foreseeability is that of a ‘reasonable man’.

A sufficiently ‘proximate’ relationship between the parties.

Proximity refers to legal not physical proximity.

Even when (1) and (2) are satisfied, it must be ‘just and reasonable’ to impose such a duty.

The inclination of ‘fair, just and reasonable’ is directed by public policy relevant to whether there should or should not be negligence liability in a given situation.

And that law should be developed incrementally, by existing duty situations.

Marc, Rich & Co. v Bishop Rock Marine Co. Ltd [1995]

The claimants lost cargo on a ship that was negligently certified as seaworthy by the classification society. It was held that the society owed no duty of care to the claimant.

Bourhill v Young [1943]

A negligent motorcyclist met with an accident and died. The claimant heard the crash but did not see it happen. When she saw the crash site after the body had been removed, she developed nervous shock. The HoL held that the claimant did not owe a duty of care.

Gunn v Wallsend Slipway & Engineering Co. Ltd [1989]

It was held that the wife of am employee who contracted mesothelioma from her husband’s work clothes could not claim damages as it was not foreseeable.

Magereson v J W Roberts Ltd [1996]

The Court of Appeal held that the danger associated with large quantities of asbestos dust was foreseeable to the owner of an asbestos factory in 1933 and accordingly the defendants owed a duty of care to children who played in the dust of the factory loading bay.

Griffiths v Brown and Lindsay [1999]

It was held that a taxi driver was not liable to a drunken passenger who had dropped on the other side of the road from a bank and was subsequently injured by a motorist while crossing the road. A taxi driver need not take any more responsibility for his passengers just because he was inebriated.

Omissions

Generally, passive omissions will not give rise to negligent conduct.

P. Pearl (Exporters) v Camden London Borough Council [1984]

It was held that the defendants who had failed to secure their flat from entry by vagrants were not liable for the damage vagrants inflicted on the plaintiff’s properties.

Smith v Littlewoods Organization Ltd [1987]

The defendants who had purchased a cinema wanting to convert it into a supermarket had left the property totally unattended. Vagrants entered and started a fire destroying the plaintiff’s properties. It was held that omission by defendants would not lead to liability.

However, there can be 4 instances where omissions may constitute negligence –

There is an undertaking by the defendant

Barrette v Ministry of Defense [1995]

The claimant had become very intoxicated after drinking alcohol in the defendant’s base. He fell into a coma and subsequently choked on his own vomit and died. The court held that the defendants were not liable to the victim because he assumed responsibility for his own actions. Nonetheless, the defendants were held liable (1/3) in respect of the death because they had not provided adequate supervision once they assumed responsibility for his safety and neither had they called for a doctor. 2/3 was deducted for contributory negligence.

Jebson v Ministry of Defense [2000]

The defendants were held 1/3 liable for a drunken soldier who fell out of a truck after a night of drinking organized by the defendants.

East Suffolk Rivers Catchment Board v Kent [1941]

It was held that a public body that acts in the exercise of a statutory power is not liable unless it increases the damage that would have sustained it had it chosen to do nothing.

Stovin v Wise [1994]

A bank on land obstructed visibility and created a traffic danger. The ...

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Jebson v Ministry of Defense [2000]

The defendants were held 1/3 liable for a drunken soldier who fell out of a truck after a night of drinking organized by the defendants.

East Suffolk Rivers Catchment Board v Kent [1941]

It was held that a public body that acts in the exercise of a statutory power is not liable unless it increases the damage that would have sustained it had it chosen to do nothing.

Stovin v Wise [1994]

A bank on land obstructed visibility and created a traffic danger. The highway authority recognized the danger and decided to take action to remove it. After 11 month it still had not and an accident took place due to restricted visibility created by the bank. The HoL held that the authority was still not liable.

Hill v Chief Constable of West Yorkshire [1988]

The mother of a murder victim claimed that the police were negligent in not apprehending the murderer before her daughter was killed. The HoL held that the police owed no duty of care to individual members of the public who may suffer injury as a result of failure to identify and apprehend unknown criminals. This was partly public policy and also that the murderer was not under the control of the police.

There is a special relationship between the claimant and the defendant

There are a number of relationships that will give rise to duty.

Employer & Employee (Public Transport Corporation v Sartori [1997])
Parent / School & Child (Carmarthenshire County Council v Lewis [1955])
Captain and Carrier (Horsley v McLaren [1971])
Referee and player in colts rugby (Smoldon v Whitworth [1997])
Boxer and Body controlling rules of boxing and the safety arrangements under which contests are held (Watson v British Boxing Board of Control [2001])

Barnes v Hampshire County Council [1969]

The school had led the children out 5 min earlier. A child ran across the road and met with an accident. The school was held liable since letting the child go at the correct time would mean that the parent would have picked the child up.

Carmarthenshire County Council v Lewis [1955]

The school had not locked its gate and a young child ran out into the roads. The lorry driver had avoided the child and swerved to his death. The school was held to hold a duty of care to the lorry driver in this case.

Kirkham v Chief Constable of Greater Manchester Police [1990]

It was held that police and prison authorities owe a duty of care to a person in their custody who is a known suicide risk, to take precaution against a suicide attempt. However, it is only when only there is foreseeable risk (after an assessment) that the police can be held liable for failing to take reasonable precautions to prevent a suicide.

Vellino v CC of Greater Manchester Police [2001]

The police do not owe a duty to take reasonable care to prevent a prisoner injuring himself during the course of an unlawful attempt to escape from custody, even if the attempt is foreseeable.

The defendant has control over a 3rd party who causes damage to the claimant

In some circumstances a defendant is in such a relationship with a tortfeasor as to have a duty to control the tortfeasor’s conduct in order to prevent harm to a claimant.

Employer & Employee (Hudson v Ridge Manufacturing Co. Ltd [1957])
Parent & Child (Newton v Edgerley [1959])
Gaoler & Prisoner (Dorset Yacht Co. Ltd v Home Office [1970])

Dorset Yacht Co. Ltd v Home Office [1970]

Some prisoners were undergoing training near the defendant’s premises. The prison wardens were negligent in supervising them. The prisoners escaped in the yacht at the premises and in so doing caused damage. The plaintiff (actually it is the insurance company) took action against the Home Office as it was vicariously responsible. The HoL held that the Home Office would owe a duty of care.

It is not so much control over the 3rd part that gives rise to obligation to act, but knowledge that the 3rd party is in the particular circumstances, a potential danger to others and in a relationship with 3rd party that enables and thereby requires the defendant to take reasonable steps to avoid the foreseeable damage.

The defendant has control over land or something likely to be dangerous if interfered with.

An occupier’s control of land may give rise to an affirmative duty in relation to the behavior of visitors

Cunningham v Reading Football Club Ltd [1992]

The defendants were held liable for injuries inflicted by football hooligans who broke pieces of concrete off the structure of the premises for use as missiles.

Where the defendant has control over some object which is likely to be particularly dangerous if interfered with by 3rd parties he may be under a duty to prevent such interference (Dominion Natural Gas Co. Ltd v Collins & Perkins [1909]).

However, in Tapp v London County Bus [1993], it was held that 3rd party intervention was a novus actus interviniens.

Haynes v Harwood [1935]

A little boy threw a stone at horse drawn carriage negligently left unattended. The horse bolted and subsequently caused damage to the plaintiff. The defendant was held liable as he was in control insofar as he had created a foreseeable danger, which could be sparked off by an innocent event.

Watson v British Boxing Board of Control [2001]

The claimant was a professional boxer. He suffered brain damage during on of the matches. He brought an action against the board on the basis that safety arrangement under which contests were held were inadequate. The court found for the claimant on the basis that the defendants did not merely have control but complete control over and responsibility for a situation which would be likely to result in injury to the claimant and if that did not exercise reasonable care to ensure that immediate and effective medical treatment was available.

Types of Claimant

Burton v Islington Health Authority [1992]

It was held that a duty could be owed to an unborn child.

The Congenital Disabilities (Civil Disability) Act of 1976 was an attempt by parliament to create a statute to protect a ‘foreseeable’ claimant. After the legislation was enacted, the Courts of Appeals accepted a cause of action in respect to pre-natal injuries even at common law. Although the fetus did not enjoy an independent legal personality, a child who suffered pre-natal injuries because of a negligent act occurring during the mother’s pregnancy, would benefit from a cause of action from the moment of birth and could recover in respect of damage suffered since the birth as a result of pre-natal injuries.

Jones v Northampton Borough Council [1990]

A club member, who undertakes a task on behalf of other members and acquires actual knowledge of circumstances which create a risk of injury to members, has a duty to inform them of the risk.

The law does not oblige a person to undertake a rescue, as a general rule, the courts will be favorably disposed to someone who does attempt a rescue and is injured in the process, provided he did not act in wanton disregard for his own safety.

Haynes v Harwood

Videan v British Transport Commission [1963]

Foreseeability of the particular emergency is unnecessary, provided some emergency is foreseeable.

The duty that is owed to the rescuer is independent of the victim. Thus, even if it was found that the defendant did not owe a duty to the victim it does not mean that a duty was not owed to the rescuer.

Ould v Butler’s Wharf Ltd [1953]

It is also unnecessary for the victim to be in actual danger provided that the rescuer’s perception of danger was reasonable in the circumstances.

Baker v T E Hopkins & Sons Ltd.

If someone negligently imperils himself, in the circumstances where it is foreseeable that someone may attempt to rescue him he will be liable for the rescuer’s injuries, even though no one owes a duty to preserve his own safety.

Hyett v Great Western Railway [1948]

The duty of care also extend to rescuers of property although a rescuer would have to be more circumspect about the risks that he could legitimately accept without being regarded as wanton or foolhardy and hence contributory negligence.

Types of defendant

Judges are immune from action of negligence.

Darker v CC of West Midlands Police [2000]

HoL confirmed that witnesses continue to have immunity both for word spoken in the witness box and words spoken by a witness or prospective witness in giving a proof of evidence before a trial. This does not extend to fabrication of evidence.

Business Computers International Ltd v Registrar of Companies [1987]

A litigant does not owe a duty of care to another in the conduct of litigation because any safeguards are to be found in the rules and procedures of the courts.

Orchard v South Eastern Electricity Board [1987]

Barristers do not owe a duty to an opposing litigant in civil litigation.

Welsh v CC of Merryside Police [1993]

The CPS does not enjoy outright immunity. The immunity does not extend to a failure to carry out its general administrative responsibility as prosecutor to keep a court informed as to the state of an adjourned case, nor where a prosecutor had assumed such responsibility.

Algouzouli-Daf v Commissioner of the Police of the Metropolis

It was stated that Welsh was correctly decided but the general rule is that CPS did not owe a duty of care to private individuals aggrieved by careless decisions of CPS lawyers.

Immunity for barristers and solicitors (Rondel v Worsley [1969] & Saif Ali v Sidney Mitchell & Co. [1980]) existed but the House of Lords, in a more recent development (Arthur JS Hall v Simons [2002]) abolished those rights.

Police

If during the course of their operation, the police negligently cause direct harm to another, they will be liable (Rigby v CC of Northamptonshire [1985]).

Kinghtley v Jones [1982]

Clark v CC of Northamptonshire [1999]

Police had a duty to provide correct date of arrest to the prison service so that the prisoner was not detained for longer than required.

Hill v CC of West Yorkshire

Osman v Ferguson [1993]

The Court of Appeal held that immunity applied even in the case of a known and identified individual who had been conducting a campaign of harassment against the plaintiff, ultimately with fatal consequences. Although the court accepted that there was sufficient relationship of proximity between the plaintiff’s family and the investigating officer the police immunity still applied even if there was sufficient proximity, and was not limited merely to conduct in the investigation of crime but extended to conduct relating to prevention of crime.

Hughes v National Union of Mineworkers [1991

Where a police officer is injured in the course of policing a serious public disorder, the senior who deployed him there is not liable.

Swinney v CC of Northumbria Police [1996]

The plaintiff provided confidential information to the police who negligently left it in the car. Subsequently, the alleged people on whom information provided got hold of the file and harassed the informant. The informant suffered psychiatric problems. The courts found for the claimant on the grounds that there was sufficient relationship between them that the police owed a duty of care to secure the information given to the police will not leak. Further, it was said that, on policy ground, if such protection is not afforded no one would come forward with information.

Capital and Counties plc v New Hampshire County Council [1997]

It was held that the fire brigade which switched off the sprinkler system in a burning building did owe a duty of care to the claimants not to exacerbate the situation.

John Munroe (Acrylics) Ltd v London Fire and Civil Defense Authority [1996]

The fire brigade arrived at the scene and without checking properly left it without having done anything. There were still ambers which re-ignited and caused further damage. The Courts held that there is no proximity of relationship between the fire brigade and a building owner in respect of negligence in tackling fires. The fire brigade is not under a duty to answer a call for help and is not under a duty to take care to do so. There is no assumption of responsibility to a particular owner and ‘general reliance’ by the owner on the fire service could not create a duty of care.

Kent v Griffiths, Roberts and London Ambulance Service [2000]

A call to the ambulance service was made and the ambulance arrived much later than expected. The claimant had, due to the delay suffered brain injuries. The court held that the ambulance service did owe a duty of care to those whom it is summoned to assist. The duty arises once the service ‘accepts the call’ for assistance.

Exercise of Statutory Powers

Where a public body acts in the exercise of a statutory power (which authorizes but does not compel particular actions) negligence may, but not necessarily, be held to be actionable. The mere careless exercise of a statutory power does not in itself establish a claim for damages. The claimant either has to demonstrate that the statute gives rise to an action for breach of statutory duty or must show that the circumstances are such as to raise a duty of care at common law.

Anns v Merton Borough Council [1978]

East Suffolk Rivers Catchment Board v Kent [1941]

X v Bedfordshire County Council [1995]

Stovin v Wise

Yuen Kun Yew v A-G of Hong Kong [1987] UKPC

W v Essex County Council [1998]

Barrette v Enfield Borough Council [1999]

It was held that a claim for negligence in taking of a statutory discretion was not likely to be justiciable unless it was so unreasonable as not to constitute an exercise of the discretion at all (as per x v Bedfordshire CC), nonetheless, acts done in implementing a decision taken as a result of the discretion could be subject to a duty of care, even if those acts also involved an element of discretion. Thus a decision to take a child into local authority care, which involved exercising discretion under a statutory power, was not justiciable but having taken the child into care, it was at least arguable that the local authority could be liable for decisions taken about how the child should be dealt in terms of his education and upbringing.

Phelps v Hillington London Borough Council [2000]

It was held that an educational psychologist could be liable in negligence when making an assessment of a pupil’s educational needs for failing to diagnose dyslexia a result of which the plaintiff’s education was seriously prejudiced and the local authority could be vicariously liable for the psychologist’s negligence. The fact that the acts were carried out within the ambit of statutory discretion was not in itself a reason why a claim for negligence should not be permitted.

RE-READ Jones and Hepple.

Economic Loss

The courts accept that damage arising from negligence on physical integrity and property is actionable. But they are wary when it comes to pure economic loss (financial loss unconnected to physical or property damage) and psychiatric damage. One of the reasons of being wary of pure economic loss is the potential for the defendant to owe a duty to an indeterminate number of claimants for an indeterminate time.

Leigh & Sullivan Ltd v Akimon shipping Co Ltd, The Akimon [1986]

The plaintiffs had bought goods from Korea that was shipped on the defendant’s carrier. The goods were damaged. But, at the material time of carriage, the goods did not legally belong to the claimants. Thus, the claimant’s action against the defendants failed at the HoL since, the defendants did not owe a duty of care to the claimants who were not the owners of the property. Rather, their loss was pure economic.

Spartan Steel and Alloys Ltd v Martin & Co (contractors) Ltd [1972]

The defendants had negligently cut underground electric cables which led to a loss of power. The defendants thus suffered a loss of GBP368 for the metal that was being worked on and a further GBP400 which was the profit that that piece of metal would have brought. Further, they claimed GBP1767 for the loss of profit from work that they could have done if not for the power cut. The Court of appeal on a 2:1 decision awarded only to recover GBP768. The loss of GBP1767 was considered pure economic loss and thus irrecoverable.

Best v Samuel Fox & Co. Ltd [1952]

A negligent driver owes duty to the injured man himself but not to the servant of the injured man who looses his job.

Inland Revenue Commissioner v Hambrook [1956]

Negligent defendant owes no duty to the master of the injured man but only to the injured.

Simpson & Co. v Thompson [1877]

A negligent defendant does not owe a duty to anyone else who suffers loss because he had a contract with the injured man.

Elliot Steam Tug Co v Shipping Controller [1922]

When property is damaged by negligence of another, the tortfeasor owes duty to the owner or possessor of the chattel, but not to one who suffers loss only because he had a contract entitling him to use the chalets.

Cattle v Stockton Waterworks Co (1875)

When water escapes from a reservoir and floods a coalmine, the workers could only recover for lost tools and damaged clothes but not lost wages.

Morrison Steamship Co v Steamship Greystoke Castle [1947]

When one ship negligently runs down another ship, and damages it, with the result that the cargo has to be discharged and re-loaded, the negligent ship was already under a duty to the cargo owners. They can recover the cost of discharging and reloading it.

Weller & Co. v Foot & Mouth Disease Research Institute [1966]

The foot and mouth disease escaped from the plaintiff’s premises. It infected cattle in a nearby ranch. This prompted a closure of the markets nearby. The plaintiff cattle auctioneers suffered a loss of business because of the closure. It was further assumed that this loss was foreseeable and the escape of the virus was caused by the defendant’s negligence. It was held that a duty of care was owed to the owners of the cattle in the neighborhood but not to the plaintiffs, who had no propriety interest in anything which might conceivably be damaged by the virus escape.

Derry v Peek [1886-90] HoL

A tramway company was authorized by statute to make certain tramways. The statute provided that tramways might be moved by animal power and, with the Board of Trade’s consent, by steam of mechanical power. The defendant directors of the company issued a prospectus saying ‘….considerable importance should be attached, is,…company has steam or mechanical motive power instead of horses, and fully expected by means of this a considerable saving will result in the working expenses of the line…’

The plaintiff relied on these statements, obtained shares in the company. The Board of Trade subsequently refused its consent to the use of steam or mechanical power except in certain portions of the tramway. The company wound up and the plaintiff took action against the appellants. The HoL dismissed the action.

Read Misrepresentation Act 1963

Hedley, Byrne & Co Ltd v Heller & Partners [1963] (HoL)

The plaintiffs relied on a bank statement that clearly excluded liability on the part of the bank to provide finance for the defendant’s advertising. The defendants liquidated and the plaintiffs lost money. The HoL held that the bankers did not owe a duty of care because they had so qualified their statements. However, it was further said that the general rule is that a party is not exempted from liability unless adequate words are used. Thus, if one assumes a responsibility to another to tender him deliberate advice there could be a liability if the advice is negligently given. If someone possessed of a special skill undertakes, to apply that skill for the assistance of another person who relies on such a skill, a duty of care will arise. The fact that the service is to be given by means of, or by the instrumentality of, words make no difference.

Also, Where the plaintiff entrusts the defendant with his affairs, in general or in particular, the defendant may have been held to have responsibility to the plaintiff, and the plaintiff to have relied on the defendant to exercise due skill and care, in respect of such conduct.

Mutual Life & Citizens’ Assurance Co. Ltd v Evatt [1971] UKPC

The minority held that when an enquirer consults a businessman in the course of his business and makes it plain to him that he is seeking considered advice and intends to act upon it in a particular way, any reasonable businessman would realize that if he chooses to give advice without qualifications, he is putting himself under a moral obligation to take some care…..and that it is within the principles established by Hedley.

Smith v Eric S Bush & Harris v Wyre Forrest District Council [1989] HoL Joint Decision

1. The plaintiff applied to the bank for a mortgage for the purchase of a house. The Bank sent a firm of independent surveyors to prepare a valuation report. The plaintiff paid the bank the standard inspection fees. The bank then issued a report that clearly stated completely absolves responsibility on the bank or surveyors. In sole reliance of the report, which said no repairs were needed, the plaintiff bought the house. It turned out that the house required serious structural repairs. The HoL found for the plaintiffs.

2. The plaintiffs applied to a local council for mortgage. The council instructed its employees to carry out a survey. The mortgage application stated that the valuation was confidential and was intended solely for the information of the council and that no responsibility whatsoever was implied or accepted for the value or condition of the property. The plaintiffs could not see the report. But they assumed that the house was at least worth the value said. But 3 year later they realized that the house was virtually un-sellable and that repairs costing more than the value of the house were necessary. The HoL found for the plaintiff.

It was held that the valuers / surveyors should know or ought to know that their report will be relied upon by the readers. And that having paid for the service, the surveyor ought to use reasonable care and skill in carrying out their duties. Thus, it was foreseeable that the report will be used by potential buyers. There is sufficient proximity in that there is an overwhelming possibility that the report will be relied upon. And the buyers pay for the valuation service, so, it is fair just and reasonable that a duty should be imposed for the advice that is given in a professional rather than social manner. Also, UCTA 1977.

Caparo Industries plc v Dickman [1990]

The plaintiffs bought shares in a company based on the audited accounts. The accounts showed profit. But the company was actually making a loss, having been defrauded by its directors. A proceeding was brought by the plaintiff against the auditors. The HoL decided for the plaintiffs.

The court found that there lacks proximity between individual investors and the purpose for which company accounts are prepared. It was said that company accounts were prepared to aid existing shareholders in holding directors accountable.

In that case, Oliver LJ devised a duty of care test for statements:

The advice is required for a purpose, whether particularly specified or generally described, which is made known, either actually or inferentially, to the advisor at the time when the advice is given.
The advisor knows actually or inferentially that his advice will be communicated to the advisor either specifically or as a member of an ascertained class, in order that it should be used by the advisee for hat purpose.
It is known actually or inferentially that the advice so communicated is likely to be acted on by the advisee for the purpose without independent inquiry.
It is so acted on by the advisee to his detriment.

It was conceded these are not conclusive conditions but only guides.

James McNaughton Paper Group Ltd v Hicks Anderson & Co. [1991]

The courts held that accountants, who had prepared, at short notice, draft accounts of a client company for the company’s chairman, owed no duty of care to a bidder who took over the company after having inspected those accounts.

Galoo Ltd (in liq) v Bright Grahame Murray (a firm) [1995]

The court of appeal said:

Mere foreseeability that a potential bidder may rely on the audited accounts does not impose on the auditor a duty of care to the bidder, but if the auditor is expressly made aware that a particular identified bidder will rely on the audited accounts…and intends that the bidder should rely, the auditors will be under a duty of care to the bidder for the breach of which he may be liable.

Henderson v Merrett Syndicates Ltd [1994]

It was decided that the assumption of responsibility principle enunciated in Hedley Byrne is not confined to statements, but may apply to any assumption of responsibility for the provision of services.

It was also established that once a case is identified as falling within the extended Hedley Byrne principle, there is no need to embark on any further inquiry whether it is fair and reasonable to impose liability for economic loss.

It was made clear that reliance upon the assumption of responsibility by the other party will be necessary to establish a cause of action because otherwise, the negligence will have no causative effect.

An existing contractual duty of care between the parties does not preclude the occurrence of a tort in the same respect.

White v Jones [1995]

The deceased had left a will behind excluding his daughters due to some problems before. But the problems were resolved and the deceased wanted to include his daughters in the will. Despite many attempts, the solicitor who drew up the will failed to come to the deceased to change the beneficiaries in the will. The deceased passed away before the will could be changed and the daughters were left out. The daughter took action against the negligent solicitor. The HoL found for the daughters.

It was opined that:

In these cases, extend to the intended beneficiary a remedy under the Hedley Byrne principle by holding that the assumption of responsibility by the solicitors towards his client should be held in law to extend to the beneficiaries who, as the solicitor can reasonably foresee, may as a result of the solicitor’s negligence, be deprived of his intended legacy in circumstances in which neither the testator nor his estate will have a remedy against the solicitor.

Read Contract Act (Right of 3rd Parties) 1999