238 Chapter 8The tort of negligence
Hedley Byrne & Co Ltd vHeller and Partners Ltdis an important case because the House
of Lords made it plain that liability for negligent misstatements could exist, and that this
liability could arise in respect of pure economic loss. A claim for pure economic loss caused
by a negligent misstatement can be made only if the following four conditions are satisfied.
First, there must be a special relationship of trust and confidence between the parties.
Second, the party preparing the advice or information must, expressly or impliedly, have
voluntarily assumed risk. Third, the claimant must rely on the advice or information.
Fourth, this reliance must have been reasonable in all of the circumstances.
In Caparo Industries plc vDickman (1990)the House of Lords held that the relationship
between individual members of a company and the company auditor was not close enough
to amount to a special relationship. The company’s auditors said in their auditors’ report
that the company had made a profit of £1.2 million, whereas in fact it had made a loss
of £0.4 million. The claimant was a shareholder in the company and, in reliance on the
auditors’ report, made a successful takeover bid for the company. The claimant had no
claim against the auditors because the auditors owed him no duty of care. However, the
auditors do owe a duty of care to the company and to the company members as a whole.Criminal liability
Occupiers of premises owe a duty of care to all lawful visitors, and a separate duty of care
to trespassers. Almost all businesses must occupy some premises, and so almost all are
potentially liable. Any person with control of the premises can be liable as an occupier. It
follows that there might be more than one occupier in respect of the same premises. People
who have control of movable structures, such as vehicles or ladders, can also be liable as
occupiers.Lawful visitors
Any person who comes on to premises with either the express or implied permission of
the occupier will be a lawful visitor. Express permission is given in words. It can be more
difficult to tell when implied permission has been given. It will, however, have been given
if the court finds that there was an agreement (not made in words) that the person was
allowed to be on the premises. So delivery drivers or service mechanics would be as much
lawful visitors on the premises of a business as would invited visitors such as important
customers. People who have a statutory right to be on premises, such as meter readers and
police officers, are also lawful visitors.claimants’ bank passed on to the claimants the information that E Ltd were considered
creditworthy. Relying on this, the claimants extended credit to E Ltd. However, they lost a
great deal of money because E Ltd went into liquidation before repaying this money. The
claimants therefore sued the defendants, arguing that the defendants had been negligent
in wrongly saying that E Ltd were creditworthy.
HeldThe defendants were not liable because their letter had made it plain that they gave
their advice without responsibility. This prevented a duty of care from arising. If they had not
made this plain, the defendants would have been liable for their negligent misstatement.