#16154 - Negligence Caparo V Dickman Test - Tort Law

NEGLIGENCE: Caparo Test

_____________________________________________________________________

Stapleton: 107 LQR 249

• Central flaw in Caparo/HL approach to economic loss is assumption that difficult issues of duty should be analysed within/by analogy to established case law

  • Because this can “preclude consideration of factors/policies that would provide a more coherent overall approach

• By dividing cases into categories, artificial barriers would be set up and decisions would focus on irrelevant characteristics such as whether damage was caused by act or words, rather than focusing on policy issues that ought drive decision-making

• Consumers are already adequately protected by alternative means (eg. First party insurance) so no need to recover damages for PEL

Stapleton: in Birks (ed), Frontiers of Liability

• Problem: reluctance to draw out underlying principles in tort law rather than proceed on case-by-case basis (“retreat by appellate courts from broad principles to timid pragmatism”)

  • Consequence: expansion in kinds of claim possible increases strain that negligence has on tort law

    • Manufacturers/builders sued successfully for not engaging in expensive post-supply surveillance

    • Criminal victims suing their assailants in tort

    • Victims of passive smoking suing their parents

    • Local authority sued for not having made sure C was adopted

    • Claims for one party failing to control another

• Retreat to incrementalism motivated by danger of liability for economic loss getting out of hand

  • Problem with incremental approach is that its principles are meaningless and give no guidance to how the law should develop

  • Often tests like “proximity” etc. are only convenient labels placed after decision has been reached on other unenunciated grounds

  • “Pre-judged pockets” approach unsatisfactory because cases often have more than one judicially important factor – by focusing on one factor, courts risk obscuring others that are equally important

    • Flaw in Caparo approach is it implies that courts will understand which cluster of decided cases a new case is best associated with

• Solution: stop starting with search for pockets of caselaw and instead balance pro-liability and countervailing factors before deciding whether to impose liability

• Problems with current approach:

  • Confusing and awkward dicta: Smith v Bush and D & F Estates reached opposite conclusions and invoked “consumer protection” to justify both

  • Overprotection of business interests: courts failed to draw out a general policy of not assisting people who could have protected themselves through other means

  • Courts failed to provide doctrinal understanding of cases where compensation is justified but that don't fit into a recognized pocket of cases (Ross v Caunters)

Stapleton: 111 LQR 301

• In order to contain law of negligence courts must look for coherent principles regarding countervailing factors (more important to look for when liability is not imposed than when it is)

• Principle of restraint: alternate means of protection

• Restraint is desirable because currently tort rights are often denied to private citizens and reorienting tort law towards denying protection to commercial profit seekers is consistent with protecting injured private citizens

Stevens, Torts and Rights (OUP 2007), pp 1-3 and 20-43. (might also need to look at 3-15).

• Tort law is not concerned with the infliction of loss, but the infringement of rights

• Law of negligence characterized by imposing liability unless there is a convincing reason to deny it (Anns and three stage test)

• A better conception is viewing tort as an infringement of rights – this is inconsistent with principles such as slander, which is actionable only upon proof of consequential loss

• Economic loss is not without more actionable, a position difficult to justify under a loss-based approach

• Possible explanation: avoiding indeterminate liability

  • Unsatisfactory:

    • This is not always the case – the usual case is a purchaser of defective things (Murphy v Brentwood) where the only possible claimant is the purchaser and economic loss the value of the loss

    • There are indeterminacy problems in other contexts that aren’t seen as sufficient to exclude liability

    • Stapleton tried to distinguish between extensive number and indeterminate number, but no number is enough to justify an exclusionary rule: the number resulting from a chemical leak may be uncertain for a long time, but this doesn’t provide D with a privilege to poison

• Other explanations:

  • Right not to have economic harm inflicted would deter competition and freedom of speech (eg. Greenpeace describing Esso as “the world’s number one climate criminal” initiating a boycott of its products)

    • Not general application

  • Economic loss is less important than other forms of loss

Hedley Byrne v Heller [1964] AC 465

Facts: C, who planned to place orders for a company and asked bankers to enquire into its financial stability. Bankers approached D who gave favourable responses but stipulated that these statements were made “without responsibility” and no fees were charged. C relied upon the references and suffered PEL. Brought action against D.

Held (HL by majority): a negligent misrepresentation may give rise to a cause of action even in the absence of a contract. But this case involves an express disclaimer so no such duty is implied.

Dissenters: even without disclaimer, it is doubtful whether a duty exists – arguable that the only duty would be to give an honest answer.

Lord Reid:

• Donoghue has no direct bearing on this case because although it may encourage us to develop existing lines of argument it cannot allow us to disregard them

• Many differences between acts and words:

  • Words casually expressed with foresight of influencing audience cannot lead to liability in the same way as that made in a professional setting, but casually circulated articles can lead to liability (manufacturer may have claim against guests who are injured because their host casually supplied faulty wine)

  • A negligently made article will only cause one accident, but words can cause many (may be broadcast to wider audience) so proximity is difficult to establish

• Thus there is good sense that in general an innocent but negligent misrepresentation gives no cause of action

• What more is required?

  • Speaker undertook expressly/impliedly some responsibility

    • Contract is a good indication, but perhaps even without a contract there can be liability (rejects claim that Derry v Peek established a general rule to the contrary)

    • A reasonable man knowing he is being trusted on advice has three options: 1) say nothing, 2) give advice with qualification accepting no responsibility, 3) give advice without qualification. If he chooses the third option, he takes on some responsibility

• D never undertook duty to exercise care in giving their replies so appellants cannot succeed.

Lord Morris:

• If A possesses a special skill and undertakes to apply that skill for the assistance of B who relies on this skill, then there is a duty irrespective of contract

• Words (medium) makes no difference

• Where A is placed where reasonable person would rely on him, and gives advice/allows advice to be passed on, there is a duty of care

Lord Devlin:

• The proximity principle in Donoghue can be applied to words and deeds

• HL’s dismissal is primarily based on principle that responsibility can only attach to a single act that implied a voluntary undertaking to assume responsibility

• Where there is a relationship equivalent to contract, there is a duty of care

  • Relationship can be general (eg. solicitor/client, banker/customer) where simple existence of relationship needs to be proven

  • Or particular (requires examination of facts)

Commentary:

• Lord Morris and Reid identify general rules of components of relationship sufficient to establish duty:

  • Recipient is trusting D to take care

  • D knows this

  • Reasonable to trust D

  • Special skill (Lord Reid only)

• Lord Morris doubts whether there would be a duty even in the absence of a disclaimer because it may not be reasonable to expect D to go to great lengths to ensure his opinion is soundly based

• Lord Reid didn’t establish general rules but rather focused on closeness to contract of relationship between parties (only difference is lack of consideration)

  • Also thought that application of “voluntary undertaking of responsibility” is an application of proximity

  • Concedes that closeness to contract will not apply to all future cases, but unlike Morris and Reid, doesn’t attempt to set out criteria for future cases

Aftermath:

• Meaning of “assumption of responsibility:

  • Meaningless – courts will find this whenever they find a duty

    • Lord Griffiths in Smith v Bush

    • Lord Slynn in Phelps v Hillingdon LBC

  • Meaningful – this can only be found in certain definable circumstances and when courts found this outside of these circumstances, they were abusing the concept

    • Lord Steyn in Williams v Natural Life Health Foods

    • Lord Bingham in CEC v Barclays Bank

  • Extended Hedley Byrne principle: if A indicates to B that B can safely rely on him to perform a task with care and skill and B so relies on A, then A will owe B a duty to perform with that degree of care and skill

Spartan Steel v Martin [1973] QB 27; 89 LQR 10

Lord Denning expresses the opinion that all relational economic losses should be covered by a general exclusionary rule.

Facts: D, through negligence, severed a power supply and cause C’s factory, engaged in smelting, damage in the melting metal needed to be damaged (physical damage) and also loss...