Negligent Misstatement

Question 1

Negligent misstatement in…

Answer 1

NZ

Question 2

Negligent misrep in…

Answer 2

UK

Question 3

When does a negligent misstatement claim arise?

Answer 3

D made a statement negligently (some kind of representation negligent) the P relies on that statement to detriment and sues the D

Question 4

Did this use to be a normal negligence claim?

Answer 4

Yes

Question 5

Where is our attention going to be on?

Answer 5

It is going to be on the duty of care, as seen in Donoghue v Stevenson

Question 6

What did Donoghue v Stevenson set out?

Answer 6

That if the D does something that places the P at a reasonable foreseeable risks of injury that a duty of care would be owed

Question 7

In the old approach, were you able to recover loss that you relied on?

Answer 7

No because you had to show fault (Gould)

Question 8

Background cases?

Answer 8

Derry v Peek

Le Lievre v Gould

Question 9

Cases?

Answer 9

Candler
Winterbottom v Wright
Hedley Byrne 
Scott Group
Caparow?
Hercules Managements
Edgeworth Construction
Turton v Kerslake
AG v Carter
Cygnet Farms
Robertson and Wang

Question 10

Facts of Candler

Answer 10

The D in candler is an accounting firm that has contracted with a miner company (third party). The P is interested in investing in the mining company. The mining company asks to draw up its accounts to show the P what out financial position is. And that’s what the D does and the third party shows it to the p
And the p decided to invest 2,000 and then another 200 pounds
The accounts are incorrect and resulted the P loss there investment and they want to sue the D that (you give us this report about the third party’s financial position and in reliance of the report we invested, you negligently prepared the report and as a result we have lost our investment)
There is was no contract between the P and D. They cannot sue in breach of contract. So they bring a tort claim against the D. Whether this issue falls under the pattern of Donoghue v Stevenson. It is foreseeable that the p would invested after seeing those reports. So if you view it that way then there ought to be liability here. The P lost

Question 11

Do you need to fit the context with the Donoghue v Stevenson case

Answer 11

Yes

Question 12

Facts on Winterbottom v Wright

Answer 12

The post master general need to deliver the mail and contract to supply some coaches to used to deliver post and to made sure they were repaired
The post master only contracted with someone to operate the coach and then they contract with a coach driver to drive them. There was an accident and the driver was injury and they tried to bring a claim against the D. The courts said what is the P suing the D for? The P is suing the D because the D failed to manage the coachs properly? They need to repair them because they had a contract with the post master general
Because the d is being suing for a breach of contract is sued to who the contract is owed
The court said if the D is going to be sued for repairs, the only person you can sue is the post master general
So the P failed. The duty of care is owed to the first investment not the second

Question 13

What case is similar to Donoghue v Stevenson

Answer 13

Winterbottom v Wright

Question 14

Facts on Donoghue v Stevenson

Answer 14

Donoghue tried to sue the manufacturer in tort. Because the manufactor produced the beer, the P wouldn’t be able to sue. But the P did successfully sue

Question 15

What is Denning saying in Candler?

Answer 15

That there was this idea there if there was contract between a contract between the D and the third party then that would mean the that P would be unable to sue. And that’s what the d is trying to say
The decision in previous case, the contract between the d and the third party gives the D emooility against the P (that cannot be right because that is a problem against pritivity rules). The contract between the D and the third party should have no bearing on the ability for the p to sue the d (if you want emonility against the d then the d has to get a contract against the P – you don’t get emonility against the p by forming a contract with the third party)
So yea it is true that the d had a contract with the mining company, but that is irrelevant. So all the problems were solved in Dennings problem
So there is no reason to not to say that the duty is owed. So it is obviously that there should be liability in this case

Question 16

Firstly, who owed a duty of care under Candler - Denning LJ?

Answer 16

Experts

Question 17

Secondly, who owed a duty of care under Candler - Denning LJ?

Answer 17

They owe a duty to there clients and knows the accounts are going to be shown

Question 18

Thirdly, who owed a duty of care under Candler - Denning LJ?

Answer 18

What transactions do the duty of care extend to? Only to those transactions for which the accountants knew their accounts were required

Question 19

Negligent misrep protects… (in Candler, Denning’s view)

Answer 19

foreseeable reliance on negligently made statements

Question 20

Cause of action arises out of… (in Candler, Denning’s view)

Answer 20

Donoghue v Stevenson

Question 21

What is the special limitations in Candler? (Denning)

Answer 21

1. D must have special knowledge and skill in the subject matter of the representation.
2. P must rely on the representation in accordance with the purpose for which it was made.
3. P must be shown the representation with the knowledge and/or consent of the D.

Question 22

Does Denning’s view lose?

Answer 22

Yes because they didn’t want to overturn the Gould approach

Question 23

Facts of Hedley Bryrne?

Answer 23

So they were waiting for the case to use the denning (to overturn the gould case). The P receives the reply from the D. This is what they said as a reply (disclaimer). So they ask about they give us some information about easy power. So they invest and they suffer a loss. But this isn’t quite the right case to overturn gould because of the first line. The p loses
The courts do something very strange. The courts recognise that there is recover when there is no recovery in that area. They wanted to change the law in the P direction (but they wanted a different case). So I am guessing they are sick of waiting for the perfect case. If it was clear that the P was going to lose so why did he spend so much money (but the p didn’t know because this lawyer lied to him about his chances of success and he was saying that he would be the guy to overturn gould). They try to push that the facts do aline. They proceeeded on the basis that there is no disclaims (pretending) and then at the end they bring the disclaims back. So they try to set out the law and then made the p lose when they bring the disclaimer at the end. Secondly, they sideline the issue of the D’s negligence

Question 24

What did Lord Pearce say in Hedley Byrne?

Answer 24

Ordinary Principles of the law of negligence and:
1. D must have some expertise in the subject area of the advice, and
2. The D must have shown the advice to the P or must have known that the advice would be shown to the P.
(close to Denning’s view in Candler)

Question 25

What did Lord Reid say in Hedley Byrne?

Answer 25

A duty of care is owed when the D expressly or impliedly assumed responsibility to the P.
When will the D have impliedly assumed responsibility?
When:
1. the P was trusting the D to exercise due care,
2. it was reasonable for the P to do so, and
3. the D knew or ought to have known that the P would rely on the information.
It is actual responsibility from one person to another

Question 26

What principle did Lord Reid say in Hedley Byrne?

Answer 26

An obligation impose by the law or is the obligation created by the d when they act to assume responsibility

Question 27

What does Lord Reid say in Hedley Byrne about AOR?

Answer 27

The reason there would be liability because the D took responsibility for providing the information

Question 28

What does Lord Reid say in Hedley Byrne about AOR without a disclaimer?

Answer 28

If the d provides advise the p, without a disclaimer, then it is appropriate to say that he assumed responsibility (just like we would say in the law of contract

Question 29

What does Lord Devlin say about consideration in Hedley Byrne?

Answer 29

The doctrine stands in way because if there wasn’t consideration then there wasn’t a contract

Question 30

What does Lord Devlin say in Hedley Byrne?

Answer 30

D duty of care exists when:

1. There would be a contract but for the absence of consideration.
2. There is a relationship ‘equivalent’ to contract.
3. The D has undertaken responsibility to the P.
4. 1, 2 and 3 are intended to be equivalent.

Question 31

What are the two views?

Answer 31

Donoghue (ordinary negligence law) and then there is the law of contract without the doctrine of consideration

Question 32

Facts on Scotts Group?

Answer 32

Ordeiters prepared a report (d) in the financial position of a company. And they made a mistake of 38,000. The report was made public. That meant that the p had access (they were thinking of investing)
And has part of the decision making they look a the report
In reliance of the report, they invested in the company
They discovered the error, and they are suffer a loss because of the reliance of the report and wouldn’t of invested as much
But in principle there would be liability because it was reasonable foreseeable (Donoghue, and dennings view)
So there is principle liability
But the judge said there wouldn’t be liability because the p didn’t suffer any loss
The p loses

Question 33

What did the judges say in Scotts group?

Answer 33

¡	Richmond P:
§	Need for assumption of responsibility to the P. 
¡	Cooke and Woodhouse JJ:
§	Need only reasonable and foreseeable reliance.
§	Control mechanisms: 
1.	Expertise of defendants. 
2.	Not in casual circumstances
3.	Intermediate examination

Question 34

Facts on Caparow??

Answer 34

The P case is stronger
the D repairs a report for the company’s annual meeting
the d knows that that report is going to members of the company and it is the purpose. the p is a member of the company
and the report is given to the p in reliance on the report the p chose to invest and suffer losses and want to sue the d. the report was prepared and given to the p, that is the difference. the courts say they loss
the reason is because the purpose of which they prepared the report for the use at the agm, if you suffer loss in reliance of the report in the agm
you used the report for a different purpose which was to make an investment decision
the reason that the purpose makes the difference is because we can’t slow the p to sue the losses for the purpose different to why it was prepared because it would not be fair just and reasonable.
they also say because there was insufficient proximity between the parties (it means we don’t want to the p to recover)
but truly jr is because while the d assume reponsobilitt for the use of agm not to invest but they cannot say that. and from this decision, they suffer loss
There wasn’t a signigcant proximity and a duty of care (it would not be fair just and reasonable)

Question 35

Facts on Hercules Managements

Answer 35

D prepared a report for the general meeting, but they also use it to invest
The court also says that there is no duty of cre owed (same)
The difference is the conclusion to reach that decision
1st step, proximity and 2nd step policy
These on the slides were the policy argument
Whether these reasons are consistent with each other

Question 36

What is the case that discussed an Exclusion clause?

Answer 36

Edgeworth Construction

Question 37

Facts on Edgeworth Construction?

Answer 37

This is the only case that we look at where the p wins. The d are a firm of engineers
They provide the crown with construction of a roadway. The crown wants to build a road
And they want to get the d for specifics on what is needed to make the roadways
The d provides that info to the crown
Now the crown is looking for people to build the road (p) and provides the info needed from the d
The p realizes that there were errors and it cost way more than they thought it was and they suffered loss. The obvious party to go for is the crown and the obvious cause of action is contract (but there is a problem (see slide). It created a warenntee that the roading of road could be done under the specific, but there is a clause of the contract saying that it is not a warrantee (so it funcations as an exclusion clause)
So they go after the d and they fail before they get to the sc. They were not made to the p by the d
The d made representations to the crown and they took at the representation and made it to the p
So they said the p loss
Once we know that the d never made a repsentation then there is no liability
They is regected by the sc. It was reasonably foreseenable that someone was going to rely on the report to there detriment. The exclusion claue between the crown and the p was excluding liability between them to not the p and d
There is was contract between the p and d so there is no exclusion clause. The purpose of the report was not to build a road it was help the crown find someone to build the road, but the d ought to of realized that someone would have used it to build the road

Question 38

What is the only case where the P wins?

Answer 38

Edgeworth Construction

Question 39

Facts on Turton v Kerslake

Answer 39

NZ version of Edgeworth Construction. The difference is it is a road that is being built not the hospital
Rea health board wants to build a hospital and create a contract with firm to architechs to design the hospital . They hired to d to do specific in relation to the hospital. Kerslake provides info to the arhitects. Then the firm contracts turton to build the hospital
Turton realiases there are errors and it will cost more. The obvious will be to sue the arhictech for breach of contracts, but they cant cause of the exclusion clauses. These are not clauss between the d and p cause there is no contract
The courts decided there would be no liability because the exceed of liability was governed by the cluases in the contract and the clauses are so clear that we cant change it

Question 40

Principles on AG v Carter

Answer 40

¡ Anns test = proximity + policy
¡ Proximity
§ Was the Ps’ reliance on the certificates reasonably foreseeable and reasonable?
§ The reliance was reasonably foreseeable but not reasonable, because (i) the certificates were not issued to the Ps and (ii) were they issued in order to aid the Ps in their decision to purchase the vessel.

Question 41

Facts on AG v Carter

Answer 41

P buys a boat
The inspection showed that there were no problems
In reliance the p purchased the vessel
But there were heaps of problems and the boat was taken to the scarap
The court ask what was the purpose of the legislation
Because the ansqer to that question would show us what th epirpose for asking fo it is
Safety was the purpose
The nz coa followed the anns test
The key step is promitiy
1/ it was reasonable forseenable but not reasonable, they weren’t issued to the p it purchased the boat
Favous the d (like always)
Lecture thinks it is wrong to say that it is unreasonable (eg buying a car because it had a recent wof)
The right way to decide was there an assumed reposonsbility

Question 42

Facts on Cygnet Farms?

Answer 42

The D isnt actual the D, it is the agent of bank (ANZ, they are innocent but inheritened the liability). There is a dealing with the d and agent of the bank and the p (husband and wife farmers). The p and the d enter in a transaction for 4 mil
Enter into this with no in financial dependant advise, they rely solely on the d. They trusted the guy they were dealing with. Rural agents of farmers become friends with the farmers. They drive around and talk to them
There is a relationship that exist. He tells the (precontracual nego) the d tells the p: that there is no downside to the p in entering into this transaction (you can only win you cant lose) (that is incorrect – you can lose) AND the d said the bank will provde you with ongoing and approparate advise (and that never happened)
They did lose

Question 43

What do you ask first?

Answer 43

Is it reasonably foreseeable?

Question 44

What section under Contract and Commercial Law Act 2017 discuss misrep

Answer 44

s 35 - damages for misrep

Question 45

You can only sue in tort if you can sue in contract. True or false?

Answer 45

True

Question 46

Facts in Robert and Wang

Answer 46

Third party wanna to gamble at the p casino. He wants an account 800,000
You need crefit reference from the bank for twice the amount. So the casino it gets another third party to ask the bank for a credit reference. The d is the bank that provides the credit reference to the other third party (birmington street services) and pass it back to the p
The bank knows that it is not birmington street information, but they don’t know what it is for
There is a problem with the third party gambler doesn’t have as much money they thought so the p suffers loss
Can there be liability when the d didn’t know how the p was
If we approach from negligence there is no problem with p and d not knowing even other (Donoghue and stvenson didn’t know each other). Lord Sumption position is yes there is a law of undisclosed prinicples, but it doesn’t follow al the ontract that apply here

Question 47

Duty of care cases in NZ

Answer 47

North Shore City Council v Attorney-General (The Grange); Body Corporate No 207624 v North Shore CC; Carter Holt Harvey Ltd v Minister of Education

Question 48

In determine if there is a duty of care look at:

Answer 48

In determining the existence of a DoC, the court must ask:
(a) First, whether everything bearing on the relationship between the parties, including its factual and policy aspects, establishes a prima
facie duty of care, particularly:
(i) that the loss was reasonably foreseeable; and
(ii) that there is sufficient proximity in the relationship – that the closeness of the connection between the parties means the defendant is most appropriately placed to take care to avoid the damage (including whether liability will create disproportion between the defendant’s carelessness and the actual form of loss suffered); and
(b) second, whether or not it is fair, just and reasonable to impose a duty of care, having regard to policy considerations concerned not with the relationship between the parties but with the effect of recognising a duty of care on other legal obligations, the legal system and society more generally (including the relative capacities of the parties to insure and the incentive effects).