04. CASES on Negligence. Flashcards
Hedley Byrne v Heller (1963)
A group of merchant bankers were held liable for a negligent misstatement made to a creditor of a third party.
The case established that a professional owes a duty of care to persons who rely upon their work, even where no contractual relationship exists.
JEB Fasteners v Marks Bloom (1982)
An accountant negligently prepared accounts overstating stock values and profits.
The claimant’s action for negligence failed since they could not prove causation to the court’s satisfaction.
Caparo v Dickman (1990)
An auditor was deemed not to owe a duty of care towards unidentified groups of people, irrespective of whether those people relied upon the report.
An auditor’s duty of care is owed only to the body of shareholders as a whole.
RBS v Bannerman (2005)
A duty of care was owed because defendant was aware of the identity of the person relying upon the professional advice and that they would rely on it.
ADT v BDO Binder Hamlyn (1996)
The verbal statement of a partner was sufficient to imply that the firm assumed responsibility, that is, acknowledged the existence of a duty of care.
When the audit report was later found to be negligent BDO were held liable for the loss of the third party.
Robinson v P E Jones (Contractors) Ltd (2011)
A housebuilder responsible for building a house with defective chimney flues was deemed to have no concurrent duty of care not to cause economic loss in tort.
The householder could only therefore rely upon the [inadequate due to an exclusion clause] remedies under contract.
Springwell Navigation Corp v J P Morgan Chase Bank (2010)
Estabished that it is harder to establish a duty of care between a professional and sophisticated investors, who are more likely to be considered responsible for their own actions.
Donoghue v Stevenson (1932)
A snail was found in a bottle of ginger beer. The person who drank the ginger beer was in contract neither with the cafe owner nor the manfuacturer.
The case established that a duty of care is owed by a manufacturer to a final consumer, even in the absence of a contract.
The Nicholas H (Marc Rich & Co v Bishops Rock Marine) (1995)
Codified the tests of whether a duty of care exists:
-Damage reasonably forseeable?
-Proximity between the parties?
-Fair, just and reasonable?
-In accord with pubilc policy?
Blyth v Birmingham Waterworks Co (1856)
Established a ‘baseline’ standard of care: the standard of “a reasonable man, guided upon those considerations which ordinarily regulate the conduct of human affairs.”
Roe v Minister of Health (1954)
A doctor gave an injection without knowing that it was contaminated. Since he did not know and had no reason to believe of such contamination it was deemed that there was no breach of a duty of care.
Subsequent developments can not retrospecively establish a breach of duty of care.
Paris v Stepney Borough Council (1951)
A worker blind in one eye was not provided with goggles by his employer. Unluckily an accident caused him to lose the sight in his other eye.
The case established that a higher standard of care is required where there is a relevant vulnerability and the defendant knows or should know of it.
Spartan Steel Alloys v Martin Co Contractors (1973)
Established that damages too remote are not claimable. The defendant caused the electricity supply to the claimant’s foundry to be interrupted. They were found liable only for the loss resulting from the scrappage of a steel ingot in production, not a more general loss of production.
Junior Books v Veitchi & Co. Ltd (1982)
Sufficient proximity was deemed to exist between a sub-contractor and the owner of a building to allow a successful negligence claim.
James MacNaughton Papers Group Ltd v Hicks Anderson & Co (1991)
Draft accounts were prepared for a company chairman. A third party inspected the accounts, took over the company and then suffered loss.
Their claim of negligence failed. No duty of care existed between the preparer of the accounts and the third party despite that party’s alleged reliance.
Barclays Bank plc v Grant Thornton UK LLP (2015)
Established that an auditor’s disclaimer to the effect that a duty of care is owed only to the addressees (company members) of an audit report and not to any third party is valid in law.
Morgan Crucible v Hill Samuel Bank Ltd (1991)
A claimant’s action for negligence succeeded because a duty of care was deemed to exist towards a known takeover bidder who made the claimant aware of their reliance on financial statements.
Galoo Ltd v Bright Grahame Murray (1995)
Confirmed that an auditor owes a duty of care to a takeover bidder when they have been expressly informed that the bidder will place reliance upon the audited accounts, in this case to fix a takeover price.
Law Society v KPMG (2000)
A duty of care was deemed to exist between a professional body (the Law Society) and a preparer of accounts for one of its members (an individual firm of solicitors).
It was deemed entirely forseeable that an adverse accountant’s report could result in intervention by the Law Society for the protection of the public.
Andrew v Kounnis Freeman (1999)
A duty of care was deemed to exist between the CAA and the preparer of accounts of an individual travel agent.
It was entirely forseeable that the preparer knew that the CAA would rely upon their work in determining whether to renew the travel agent’s license.
The Wagon Mound (1961)
Damage casued by a fire resulting from the ignition of oil floating on Sydney harbour was not claimable in damages since it was not reasonably forseeable.
Lister and ors v Hesley Hall (2001)
Extension of vicarious liability to an employer even when the employee causes loss while employed that is outside their job description.
The ‘close connection’ criterion.
Dubai Aluminium Co Ltd v Salaam and ors (2002)
A solicitor’s drafting of bogus agreements was deemed so ‘closely connected’ to his work that his employer was deemed vicariously liable.
Attorney General v Hartwell (2004)
A police constable’s employers were not deemed to be vicariously liable when he shot his estranged partner in a bar.
The ‘close connection’ test was not satisfied.
