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When will PEL be recoverable
● Modern test established in Customs & Excise Commissioners v Barclays [2006] ○ Question 1: Did D “assume a responsibility” to the C (under Hedley Byrne v Heller [1964]) ■ If YES , then D owed C a DoC, and pure economic loss is recoverable ■ If NO, ask question 2 ○ Question 2: Are there any analogous cases on which a DoC can be established? ( Robinson v Chief Constable of West Yorkshire [2018] applied) If not, then apply the tripartite test from Caparo v Dickman [1990] ■ I.e. would it be fair, just and reasonable for a DoC to be found? (see below)
Question 1 - Did D “assume a responsibility” to the C (under
Hedley Byrne)
Narrow Reading of Hedley Byrne ● Per the precedent established in Hedley Byrne, was it the case that: ○ (i) D provided voluntary advice to C ○ (ii) D indicated that C could rely on their advice ○ (iii) C did rely on the advice ● A number of relevant considerations must be taken into account: ○ Was D aware of C’s identity? If NO , then responsibility was not assumed - Playboy Club v BNL [2018] ○ D will only be liable for the losses which can be attributed to their negligent advice - SAAMCO v York Montague [1996] ○ D can assume responsibility by virtue of their role/profession (on the extended reading). In these cases it won’t matter that C didn’t rely on their advice - White v Jones [1995] ● As to requirement (ii): ○ If D takes on the job of advising Cs in the knowledge that their statement will be relied on, he is implicitly indicating that the Cs can rely on the advice - Welton v North Cornwall Dis. Council [1997] ○ What matters is whether D gave C the impression that their advice could be safely relied on – their subjective perception doesn’t matter: ■ Lord Hoffmann in Customs and Excise Commissioners v Barclays Bank plc [2007]: “the answer depends upon what would reasonably be inferred from their conduct against the background of all of the circumstances of the case.” ■ Henderson v Merrett Syndicates [1995] (per Lord Goff): ‘it must be expected that an objective test will be applied when asking the question whether, in a particular case, responsibility should be held to have been assumed by the defendant. ■ Someone giving advice on a social occasion will not owe a DoC to the advisee or calling a friend without indicating that advice will be relied upon Tidman v Reading Borough Council [1994] ■ Same if circumstances were such as not to put D on warning - James McNaughton Paper Group Ltd v Hicks Anderson & Co [1991] (held, no liability for an off- the-cuff statement made by accountant as to profitability of a company in the course of negotiations to take over the company) ● Different if it had been indicated to the accountant that advice will be relied upon - Galoo v Bright Grahame Murray [1994] ● Different where D indicated that they could be safely
behalf the work is being carried out that they could be relied on to perform the work with a certain degree of care and skill, and the client relied on those assurances by requesting the main contractor to employ the sub-contractor ■ Junior Books Ltd v Veitchi Co Ltd [1983], as explained in D & F Estates v Church Commissioners [1989] (per Lord Oliver) and in Murphy v Brentwood DC [1991] (per Lord Keith). See also Perry 1992, 302–8. The actual decision in Junior Books was so widely stated that it triggered a backlash against it, a backlash that carried over into the decision of the Court of Appeal in Robinson v Jones (Contractors) Ltd [2012] QB 44, at [92], where Junior Books is condemned as ‘aberrant, indeed as heretical’ (at [92], per Burnton LJ). McBride and Bagshaw assert that it can be justified ○ An engineer engaged to undertake building work by a client - Congregational Union v Harriss and Harriss [1988] ○ Accountant to client ○ Referee to the participants of the game - Vowles v Evans [2003] ○ Someone who runs an investment syndicate will owe a member of that syndicate a duty to make decisions about what investments the syndicate makes with a reasonable degree of care and skill if that member joined the syndicate on the basis of assurances made by the manager to him, or his representatives, that the manager would run the syndicate’s affairs with a reasonable degree of care and skill - Henderson v Merrett Syndicates Ltd [1995] ○ NOTE: Local authorities will not owe a duty to exercise reasonable care and skill when assessing compliance with health and safety regulations; doing so would render them over-cautious, which would not serve the public interest - Harris v Evans [1998] (CA); Jain v Trent Strategic HA [2009] (HL) ● Other Considerations must further be taken into account ○ Did D make themselves out to be an expert in the field? ■ If yes, then D assumed responsibility - Chaudhry v Prabhakar [1988] ■ If no, and it was evident that D was not an expert, then responsibility was not assumed - Mutual Life & Citizens’ Assurance v Evatt [1971] ○ D will have assumed responsibility if they knew that C would rely on their advice (e.g. if a valuation is provided to a bank with the knowledge that the C would rely on it) - Smith v Eric Bush (a firm) [1990] ■ BUT if C could have further mitigated the risk by, for example, buying a better service package, then D will not be liable -
Scullion v Royal Bank of Scotland [2011] ○ Where a contract also exists, the C can choose whether to sue in contract or in tort - Henderson v Merrett Syndicates Ltd [1995] ○ Meaning of “reasonable care and skill” - the reasonable care and skill be will be that expected of a person of D’s standing/profession/abilities e.g. care and skill of a reasonably competent jeweller
Question 2 - Can a DoC be found from the Caparo test?
● First, it must be considered whether there are any analogous cases indicating that a DoC can be found (presumably Robinson v CC of West Yorkshire [2018]) ● If not, then the three-stage test from Caparo v Dickman [1990] is applied: ○ Was the type of damage (PEL) a reasonably foreseeable consequence of D’s actions - The Wagon Mound ○ Is there a relationship of “proximity” between C and D ○ Would it be “fair, just and reasonable” to impose a DoC on D ● Per Voyiakis, a statutory duty, can create a DoC at common law if it is consistent with the purpose of the statute. Accordingly this is why, under the Public Health Act 1938: ○ C was able to recover in Anns v Merton [1978], where the Q at issue was the cost of repair ○ C was not able to recover in Murphy v Brentwood DC [1991], where C sought to recover for the loss of market value ● Numerous other factors can be taken into account: ○ Whether the stakes were particularly high for C and they could have self-protected with ease - Spartan Steel v Martin ○ Whether D had the opportunity to avoid/limit their liability towards C
- Customs & Excise Commissioners v Barclays [2006] ■ In that case Lord Bingham argued that it would not be reasonable to impose a DoC on the bank to comply with a court order which it had “no opportunity to resist”
