1C. Duty of Care - Negligent Misstatements

Question 1

THE ‘BARWICK TEST’ FOR NEGLIGENT MISSTATEMENTS

Main elements and case authorities

Answer 1

1. Assumption of responsibility: (MLC v Evatt; Shaddock; Hedley Byrne v Heller)
2. Subject matter serious: (MLC v Evatt ; Shaddock; Hedley Byrne v Heller)
3. Speaker Awareness Of Information (MLC v Evatt)
4. Reasonable Reliance (MLC v Evatt)

• a. Capacity of Parties (Esanda Financial Corp v PMH)
• b. Nature of Subject Matter, Being Seriousness Or Business Related (R Lowe Lippman Figdor & Frank v AGC )
• c. Occasion when the advice was given: (Esanda Financial Corp v PMH) ​
• d. Material Gain (Hedley Byrne & Co Ltd v Heller & Partners)
• e. General factors to consider reasonable reliance (MLC v Evatt)

​5. Disclaimers or assumption (Hedley Byrne & Co Ltd v Heller & Partners Ltd)

Question 2

MLC v Evatt; Shaddock; Hedley Byrne v Heller on 1. Assumption of responsibility (first part of the Barwick test)

Answer 2

The speaker must realize that the speaker is being trusted by the recipient of the information or advice to give information which the recipient believes the speaker has or had access to.

Question 3

MLC v Evatt ; Shaddock; Hedley Byrne v Heller on 2. Subject matter serious

Answer 3

The subject matter of the information or advice must be serious or business nature.

Question 4

MLC v Evatt on 3. Speaker awareness of information

Answer 4

• The speaker must be aware – or the circumstances must show that the speaker should be aware – that the recipient intended to act upon the information or advice.
• This excludes advice given in at a social occasion with no thought of its possible legal consequences.

Question 5

4. REASONABLE RELIANCE

MLC v Evatt test for reasonable reliance

Answer 5

• 1. Information or advice is given.
• 2. Information was actively sought or merely accepted by another on a serious matter.
• 3. Based on the relationship, the speaker realizes or ought to have realized that he is being trusted to give the best advice as a basis for the action by the other party
• 4. It was reasonable for the other party to seek or accept
• 5. Other party act upon information or advice.

Question 6

4. REASONABLE RELIANCE
   * MLC v Evatt on A. CAPACITY OF PARTIES

Answer 6

If a person (representor) of special skill undertakes to apply skill for the assistance of another (recipient), it is satisfied that there is a capacity for the representor to give advice

Question 7

4. REASONABLE RELIANCE.

• B. NATURE OF SUBJECT MATTER, BEING SERIOUSNESS OR BUSINESS RELATED.
• Also what is the case authority

Answer 7

• (R Lowe Lippman Figdor & Frank v AGC (Advances) Ltd [1992] 2 VR 671)
• 1. Representor gives information or advice on a serious matter.
• 2. Representor intends to induce the representee to act on it
• DOC will exist if:
  
  • 1. Rep realize or ought to realize that the reptee will trust his especial competence to give the information or advice
  • 2. It was reasonable for reptee to rely on that info or advice
  • 3. If it is reasonably foreseeable that the reptee is likely to suffer a loss should the information turn out to be incorrect or advice is unsound.
• Mere foreseeability is not enough, but needs an intention to induce the plaintiff to act in reliance on the report.

Question 8

4. REASONABLE RELIANCE

• C. OCCASION WHEN THE ADVICE WAS GIVEN:
• Esanda Financial Corp v PMH on OCCASION

Answer 8

When a person gives information or advice to another upon a serious matter (not merely social intercourse) where that person realizes or ought to realise, that he is being trusted to give the best of his information or advice as a basis for action on the part of another, and it is reasonable for the other to act on the information or advice, there is duty to exercise reasonable care in so doing.

Question 9

· 4. REASONABLE RELIANCE

C. Some sort of gain

Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465 on gain?

Answer 9

Did D (the reptor) have anything to gain (directly or indirectly) from (reptee)P’s reliance on D’s words? If so, it might establishe DOC.

Question 10

5. DISCLAIMERS OR ASSUMPTIONS

Case authority and principle

Answer 10

1. Was there either a disclaimer from liability, or to the contract, and undertaking/assumption of liability?
2. If yes, must be interpreted strictly against the relying party, which may remove or reduce liability.
3. However, a disclaimer can be ineffective if the court deems it too unfair.
4. (Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465)