THE OPEN UNIVERSITY OF TANZANIA

FACULTY OF LAW

OLW 104:
LEGAL MEITHOD- CASES AND MATERIALS
(ADVANCE COPY)

Dr. M.C. Mukoyogo

Senior Lecturer and Head

Faculty of Law
The Open University of Tanzania

0
 TABLE OF CONTENTS

Lecture 1: Styles of Opinions

1.1 The Grand Style
1.2 The Formal Style
1.3 The Realist style
1.4 Style of Opinions in East Africa

Lecture 2: The Legal System: Sources of Laws Applicable in

Tanzania (Mainland).

Lecture 3: Common Law Case Technique

Lecture 4: Debate on the Determination of the Ratio Decidendi of the

Case

Lecture 5: Guide to Understanding Cases on Negligence

A: Winterbottom v. Wright
B: Frederick Longmeid & Eliza his wife v. Holliday
C: George and Wife v. Skivington
D: Heaven v. Pender
E: Derry v. Peek
F: Le Lievre v. Gould
G: Nocton v. Lord Ashburton
H: MA Lister (or Donoghue)(pauper) v. Stevenson
I: Farr v. Butters.
J: Grant v. Australia Knitting Mills
K: Candler v. Crane Christmas & Co
L: Clayton v. Woodman & Son (Publishers) Ltd.
M: Hadley Byrne & Co. Ltd v. Heller

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2
INTRODUCTION

Karl Marx: Preface to a Contribution to the Critique of Political economy,

Progress Publishers. 1970 pp. 20-22.

In the social production of their existence men inevitably enter into definite
relations, which are independent of their will, namely, relations of production
appropriate to a given stage in the development of their material forces of
production. The totality of these relations of production constitutes the
economic structure of society, the real foundation, on which arises a legal
and political superstructure and to which correspond definite forms of social
consciousness.

The mode of production of material life conditions the general process of

social, political and intellectual life. It is not the consciousness of men that
determines their existence, but their social existence that determines their
consciousness. At a certain stage of development, the material productive
forces of society come into conflict with the existing relations of production
or-this merely expresses the same thing in legal terms with the property
relations within the framework of which they have operated hitherto.

From forms of development of the productive forces these relations turn into
their fetters. Then begins an era of social revolution. The changes in the
economic foundation lead sooner or later to the transformation of the whole
immense superstructure. In studying such transformations it is always
necessary to distinguish between the material transformation of the
economic conditions of production, which can be determined with the
precision of natural science, and legal, political, religious, artistic: or
philosophic - in short, ideological forms in which men become conscious of
this conflict and fight it out. Just as one does not judge an individual by what

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he thinks about himself, so one cannot judge such a period of transformation
by its consciousness, but, on the contrary, this consciousness must be
explained from the contradictions of material life, from the conflict existing
between the social forces of production and the relations of production.

No social order is ever destroyed before all the productive forces for which it
is sufficient have been developed, and new superior relations of production'
never replace older ones before the material conditions for their existence
have matured within the framework of the old society. Mankind thus
inevitably sets itself only such tasks as it is able to solve, since closer
examination will always show that the problem itself arises only when the
material conditions for its solution are already present or at least in the
course of formation. In broad outline, the Asiatic, ancient, feudal and modem
bourgeois modes of production may be designated as epochs marking
progress in the economic development of society. The bourgeois mode of
production is the last antagonistic form of the social process of production -
antagonistic not in the sense of individual antagonism but of an antagonism
that emanates from the individuals' social conditions of existence' - but the
productive forces developing within bourgeoisie society create also the
material conditions for a solution of this antagonism. The prehistory of
human society accordingly closes with this social formation.

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1.0 STYLES OF APPELLATE OPINIONS
1. The Grand Style
ii. The FOl!llal Style
iiii. Realist Style

1.1 The Grand Style:

i. Method of laying down principles under the guise of Natural Law

rules. Whenever an issue arose which seemed to the judge to call
for relief not directly warranted by precedent, the case was up to be
decided on broad and vague grounds of "natural justice" and an
unanalyzed sense of right and wrong, and what is fair and just from
a lay point of view" J. Dickson, "The Problem of the Unprovided
Case" 81 U Pa. Law Rev. [1932J pp. 115-116.

ii. A practice represented by an uncritical acceptance of the

aristocratic view point, Coke in 1628 said;

Reason is the life of the law, nay the Common Law itself is nothing
but reason; which is to be understood of an artificial perfection of
reason, gotten by long study, observation, and experience, and not
of every man's natural reason; for nemo nascitum artifex [no one
is born a Craftsman].

This legal reason est summa ratio (is the highest reason).

iii. Much of Common Law ~ is in the aristocratic style, sure of its own
powers, and canny and shrewd in the ways of men rather than
elegant and logically sustained.

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Goodhearts view:

-those cases which have been decided on incorrect premises or

reasoning ... have become most important in law.

Bad reason may often make good law.

40 Yale. L.J. (1930) 161-183

Examples of Grand Style:

Priestley v. Fowler 3 Mess & Wels 1 (Exch., 1837)1

An employee of a butcher

In the Course of his employment while riding on a wagon of the employee,

the van failed by reason of the negligence of the fellow employee.

The plaintiff then sued the employer for damages arising from the accident,
basing himself on the then well-embodied rule that all employer was liable
for injuries inflicted on a third person through the negligence of one of his
employees.

Lord Abinger delivered the opinion of the Court. He was the son of a rich
planter in Jamaica, educated at Cambridge, married to a daughter of a
county gentleman, and himself a landowner.

Style of his opinion reflects his aristocratic confidence. He began his

discussion of the applicable law by staying:-
1
W.S. Holdsworlh. History of English Law. Methuen. London, 1903-1966. vii. pp. 4.73-475.
(ii) Roscoe Pound. 'The Economic Interpretation of the Law and the Law of Torts 53 Harvad
LR(1940)p.365-367
(iii)
6
 "It is admitted that there is no precedent for the present action
by a servant against his master. We are therefore to decide the
question upon a general principle, and in so doing we are at
liberty to look at the consequences of a decision the one way or
the other."

He went on to argue that if a master were to be liable to the servant, the

consequences would be alarming:

"To hold a master liable for- the negligence of a servant which

causes injury to another servant would be to carry the law too
far".

Categories of people who would suffer

The owner of a carriage would be liable to his coachman for defects in the
carriage made by a carriage maker to his footman, for want of skill of his
coachman; to his servant for negligence of the chambermaid in putting him
into a damp bed, or for negligence of the cook in not properly clearing the
copper vessels used in the kitchen.

On principle, permitting a servant to recover would be wrong: The servant

was ordinarily better advised about the state of affairs on the job than a
master, and hence could always decline the services if the situation worked
unsafe."

Lord Abinger did not examine the grim social realities of industrial life in
early 19th C England.

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Chief Justice Shaw of Massachusetts in Farwell v. Boston Worcester Railroad
Company, 4 Mete. 49 (1842).

In an action - an employee against his employer arising out of negligence of

a fellow servant. A case of first impression. Shaw C.J. reached the same
results as _ Abinger had reached.

Shaw like Abinger addressed himself to considerations of the rule in favour of

the elite of society:-

"In considering the rights and obligations arising out of particular

relations, it is competent for courts of justice to regard
considerations of policy and general convenience, and to draw
from them such rules as will, in their practical application, best
promote the safety and security of all parties concerned."

1.2 The Formal style

Judgement beginning with a statement of a broad principle(s) asserted to

embeded in the Common Law.

Murray v South Carolina Railway Company 1McM 385 (S.C.1841}

A case involving an action by an employee of a railroad against his employer

for injuries arising fr9m the negligence of a fellow employee.

Johnson Chancellor maintained inter alia that "the foundation of legal liability
is the omission to do some act which the law commands, the commission of

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some act which the law forbids, or the violation of some contract by which a
party is injured."

From this rule the judge deduced by logical reasoning that, since the railroad
had not done or omitted to do anything within the forbidden categories, it
was not liable.

Compare with Brett MR in H v. P (1883)11 QB.503

Legitimization on legalistic grounds. A system of reasoning drawing from

sources within the legal order itself is known as legalism

Lawrence Friedman.; "On Legalistic reasoning - a Footnote to Weber" in Wisc.

Law Rev. 1966 p. 148.

1.2.1 Basis for shift from Grand Style to Formal Style:

Weber: a shift from substantively rational law-making to logically,

formally rational law-making.

Grand Style: Opinion addresses itself to policy i.e ideological

considerations.

The Formal Style: Purports to justify decisions by the use exclusively

of materials drawn from the legal order, masks the patent fact that in
such cases judges create law.

The shift from Grand style to Formal style is also a reflection of the great shift
in economic and political power, from the aristocratic government of the

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early 18th and 19th centuries to admitting the middle classes into the
corridors of power during the fourth decade of the last century.
1.3 The Realist style
Utilization of potential precedents by making "distinctions" for those which
seemed to contradict the desired results by identifying factual differences in
a case.

They seized upon statements of the judges as authority when they wanted to
do so, although the rules forbid them to look at abita dicta.2

1.3.1 Styles of Legal Opinions in East Africa: Robert, B. Seidman,

3 EALR. [1970] 189.

Reading through reports one identifies three periods representing appellate

opinion:
(i) The 1920's - with respect to procedural matters. Opinions
tend to be terse, they rarely cite expansive authority, a high
proportion of cases are clear cases.

"If a Plaintiff brings an action on a Promissory Note, which is

either (1) not stamped or (2) insufficiently stamped can, he be
allowed to stamp the note on payment of a penalty and
proceed 'with his case or must his action on the Promisory
Note fail?"

S. 35 of the Indian Stamp Act which was in force forbade the

admission in evidence for any purpose of an instrument
chargeable with duty unless such instrument is duly stamped,
and in the first purported to modify the general law with
respect of any proviso instrument "not being an instrument

2
Read the Opinion of Lord Esher in Lelievre v. Gould. (1893) 1 Q B 491 at pp 117-126 of these Materials.

10
 chargeable with a duty of one only or a bill of exchange or
promisory note".

S. 5 of the Order of the Secretary of State applying the Indian Act to East
Africa provided:
"Any instrument to which the first priviso of S. 35 applies may
be admitted in evidence on payment of the duty with or
without penalty as the Court thinks fit in the circumstances of
the Case".

Din. 1 E.A.P.L.R. 61 (1904), Judge Hamilton had answered the same question
in the affirmative, saying that:
"That order of the Secretary of State ... specially provides in
Clause 5 .. that the documents mentioned in the firm proviso of
Section (35) ... may be admitted in Evidence".

- Opinions were brief. Basic two influences:

a) Practical Lack of reference materials

-Lack of Trained Personnel
b) Need -to announce the law and not to persuade

(ii) Second Period - the 1930's Appellate opinions-sophisticated.

Cases or authorities cited and analysed.

Change in the Judiciary - Resident Magistrates - trained lawyers.
Improved Libraries.

(iii) Third Period - Independence - Abolition of Appeals to Privy Council.

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Need to satisfy a larger public i.e. English and Colonial Judges and lawyers
and African judges.3

Llewellyn writes;

I am concerned here with one special" phase of the conditioning

machinery [i.e., the processes which socialize lawyers and
judges] which goes not only unplanned but substantially
unnoticed; that of the period style of the law-crafts. It seems to
me essential to the health of our law and legal work that student,
bar and bench should know that the Grand Tradition of the
Cannon Law is our rightful heritage and needs complete and
conscious recapture. They should read enough of the reports of
the 1830's and 1840's (and a single volume read in sequence is
commonly enough) to recognize as a prevailing style of handling
of material, as essentially made up of principle rather than of
mere precedent, and of that finer type of principle which has
perceptible reason and makes perceptible sense in life. They
should come to recognize the courts steady quest for rules
which satisfy the needs of the Grand tradition - each rule with a
singing reason apparent on its face, each rule a rule whose
reason guides and often even controls application according to
the double maxim; the rule follows where its reason leeds, where
the reason stops, there stops the rule... ,

"Only then can the student or bar or bench perceive that the
conceptions of precedent as a static something, of movement as
queer or improper or departure of figuring a court's prospective

3
Newbold. 'The value of Precedents Arising from cases decided in East Africa compared with those decided
in England" in 2 EAL Rev. 1 (1969) 5, 9.

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 result without taking full account of the guidance the court
rightly seeks also from its sense of decency and sense -that such
conceptions are all aberration which crept upon and into lawyers'
thinking in those last happy days of our legal system, the 80's
90's of the Nineteenth Century... The thinking of the whole bar
about the proper way of judicial work had taken shape by 1910
as if the Grand Tradition had never been. It is against a
rediscovery of the latter that the students, bar and bench can
then come, and come at once, to recognize that the picture of
our appellate courts over the past thirty years ... is one not of
departing from the good' old ways but rather of a groping, almost
instinctive struggle to recapture the truly good and order ways
which to we discredit of- the work of law had slid into the bar".

[Llewellyn, The Bramble Bush. pp. 156-69].

To read a selected volume from each of four decades in East Arica is to

realize that much the same sea-change has taken place and is taking place
in the period-style of legal opinions here. Three periods may be discerned in
the opinions of the appellate courts in East Africa. The first lasted until well
into the decade of the 1920's, and with respect to procedural matters, even
for some time after that. In this period, the opinions tend to be terse; they
rarely cite extensive authority; a high proportion of the cases are really
"clear case" matters, in which the appellate court is merely correcting a-q
obvious error by the local magistrate. When there were disputed issues of
law, however, the courts validated their opinions in. the Formal Style almost
exclusively.

For example, in Re a Reference, 6EAP.L.R 45 (1915), a Resident Magistrate

referred the following question:

13
 "If a Plaintiff brings an action on a Promissory Note, wp.ich note
is either (1) not stamped or (2)" insufficiently stamped can he be
allowed to stamp up the note on payment of a penalty and
proceed with his case or must his action on the Promissory Note
fail"?

Section 35 of the Indian Stamp Act, which was in force, forbade the
admission in evidence for any purpose of an instrument chargeable with duty
unless such instrument is duly stamped, and in the first purported to modify
the general law with respect of any proviso instrument "not being an
instrument chargeable with a d.uty of one only or a bill of exchange or
promissory note". Section 5 of the Order of one Secretary of State applying
the Indian Act 'to East Africa provided:
"Any instrument to which the first proviso of section (35] applies
may be admitted in evidence on payment of the duty with or
without penalty as the Court thinks fit in the circumstances of the
case".

In Hasham Kandi &Co.v. Administrator Feroz Din, 1 E.A.P.L.R 61 (1904) Judge

Hamilton had answered the same question in the affirmative, saying only
that

"that order of the Secretary of State ... specially provides in

Clause 5, that ,documents mentioned in the firm proviso of
Section [35] may be admitted in evidence".

Eleven years later, however, Judge Hamilton confessed error, but gave no
more' persuasive reasons than he had in the earlier case:
"Now, it is clear that the first proviso to Section 35 does not
apply to promissory notes, for a promissory note is expressly
made an exception to the proviso, and it consequently follows

14
 that the law as to the admission of a promissory note in evidence
is the same in East Africa".

'the law on this point, appears, I regret to'-say, to have been

incorrectly stated by myself so far back as 1904 ... "

It would seem obvious that if anything was, clear, it was that Section 5 was
not clear. Yet the judges did not believe it necessary to support their decision
by more than an assertion of what they believed its meaning to be.

Why were the decisions of the early judges validated in so terse a manner?
Why did they not look to policy ill a period in which- the law of East Africa
was just beginning to accommodate itself to its new setting? The reason for
the brevity of the opinions no doubt reflected two congruent causes. The first
was merely practical. Adequate reference books to the English law were
simply missing in East Africa. Case after case, was decided on the basis not
of the original report of the case, but a brief quote from the case in a
textbook.

The second reason which can be suggested is that the nature of the judicial
system did not require the judges to validate the~ opinions in any more
sophisticated style. The lower courts were manned not by trained judges~
socialized Ll1.to the legal profession with the values acquired by, that
socialization. Rather, they were usually laymen working in the dual capacity
of magistrate and District Officer. They would not question the' decision of
the appellate courts with their trained judges. The -early opinions were brief
because they needed only to announce the law, not to persuade lower courts
and lawyers of the correctness of the decision.

In the second period starting in the 1930's and continuing into the present
day, the opinions of the appellate courts of East Africa become, however,

15
increasingly sophisticated. Many cases are frequently cited frequently cited
and analyzed, although the consequences of the proposed rules are only
rarely discussed, and then in the briefest of terms.4

One can hypothesize that the increased sophistication of the opinions

reflected the changing conditions of the judiciary. Increasingly, Resident
Magistrates were trained lawyers. Better legal reference libraries were
available. The brief options- that were so marked a feature of the early
appellate procedures would no longer do.

The third period started with Independence, and especially since the
abolition of appeals to the Privy Council. Since then the reference group for
appellate judges in' East Africa has changed. Now they need to satisfy not
only English and Colonial judges and lawyers, but African judges and lawyers
as well. In addition, they must meet the value-Sets of the African nationalist
leaders who are in political control of their counties' destinies. Sir Charles
Newbold has written:

".... Up to the date of Independence and indeed, up to the date of the

abolition of appeals to the Privy Council, at which later date the [East Africa]
Court of Appeal became the final Court of Appeal for each of the three
partner states, the Court of Appeal was bound by certain English precedents
and it was also bound by its own previous decisions within the limits set out
above [relating to decisions of its own that are inconsistent with a decision of
the Privy Council or the House of Lords, etc., or where the decision was given
per incuriam]. The High Court of each of the partner States was similarly
bound by the English precedents -and by the decision of the Court of Appeal
unless that court itself was not so bound.

4
Jo1m Nyamuhanga Bisare v. R [1980] TLR 1 Bi Hawa Mohamed v. Alli Sefu,
Civ.Appeal NO.9 of 1983.

16
By being bound I mean that the latter court had to follow the reason of the
previous decision merely because of it being a judicial decision and
irrespective of the merits or otherwise of that reason. In these circumstances
the value of English precedents of the types set out was obviously greater
than the value of the precedents arising from -decisions of the Court of
Appeal. There was also a tendency, very understandable in the political
circumstances then existing, to regard almost any British decision superior
court as virtually binding.

As, however, from the moment when the Court of Appeal

became the ultimate Court of Appeal for each of the partner
States the- position changed radically. You will find, a number of
cases in which the Court of Appeal has made it quite dear that it
is not bound by previous English decisions and, indeed, cases in
which it has overruled in their application to East African previous
decisions."

There are, possibly, differences to be detected in the judgments

of the different members of the Court as to the extent of the
persuasiveness of English decisions irrespective of the merit for
the reasoning of the decision, but I think it clear that the Court is
unanimous in holding that it is not bound by English
precedents ... "

[Newbold, "The Values of Precedents arising from Cases decided in East

Africa compared with those decided in England, 2E.A.L Rev.1.5(1969) 5

5
Dodrua v. National Grind1ays Bank. Ltd [197U] EA 195; Jumuiya ya Wafanyakazi Tanzania v. Kiwanda cha
Uchapishaji cha Taifa, Civ Ap.No.29 of 198 CA

17
Two comments might be made about this position argued by Sir' Charles. In
the first place, it is intriguing that except for the abolition of the appeal to
'the Privy Council, the guiding statutes on the applicability of ''The substance
of the common Law, the doctrines of equity and the statutes of general
application in force in England" remains today that it has always been.[See
supra" p.,72 n.1]. The change in attitude towards English precedent
therefore cannot follow from any change in positive law. It can arise because
of the changed institutional relationships - i.e., that the Court of Appeal can
no longer be reversed by the Privy Council and, as Sir Charles implies,
because of the new political circumstances.

Secondly, it would appear plain that the reason for disregarding an English
precedent arose only because it appears to the judges in the 'Court of Appeal
as being inappropriate to the emergent African circumstances.

They had the same power before, under the proviso of the reception
statutes. Now however Sir Charles suggests that, the new political
circumstances compel them, to give a special attention to the problem.

He continues:

"There can be little doubt that a blind, adherence to judicial

precedent when circumstances are completely different from
those which existed at the time the 'precedent was set and the
needs of the community are vastly different, from those which
existed previously can do a considerable amount of harm to the
community, a degree of harm which is not by any means
compensated for by any certainty in the law. In fact, the
shackling effect of a judicial precedent which is no longer worthy
of being followed itself creates uncertainty, because it gives rise

18
 to a desire on the part of the courts to distinguish the particular
case before them from the precedent by which they are bound.

Very often this desire draws the subsequent court, in an effort to

arrive at a just decision, drawing a distinction from the earlier
precedent, but a distinction without a difference. This
distinguishing of a precedent, when in fact there is no good
ground for doing so creates nothing other than uncertainty in the
law. It would be far better, when a precedent has outlived its
usefulness, to say so and the community would have the benefit
of a c1ear cut change of principle of a decision based on modern
requirements or based on a sounder logic... "6

To say that precedents can properly be disregard~ because the rule they
represent longer meets "modern requirements" can only suggest that one
must look to 'modem' requirements" to determine whether a rule in a trouble
case is desirable. That can only mean that the Court must look to the social
consequences of the rules, in order to" decide whether or how will function
under "modem conditions". That is to say, the institutional and political
arrangements require a court to look to the Grand Style to justify its
decisions. One can predict therefore that, more and more the court is apt to
abandon the formal style, and validate its decisions in terms of the
consequences of the selected rule.

6
[Newbold, "The value of Precedents Arising from Cases decided in East Africa as Compared with those
decided in England", Eastern African Law Review 1, 9 (1969)].

19
 LECTURE TWO

THE LEGAL SYSTEM: SOURCES OF LAWS APPPLICABLE IN TANZANIA

1. The Tanganyika Order in Council, 1920. Art. 14 Arts. 17 and 24 (made

under the English Foreign Jurisdiction Act. 1890 (53. 54 Viet. C.37).

2. The Judicature and Application of Laws Ordinance (Cap. 453) S. 2(2).

3. The Interpretation of Laws and General Clauses Ordinance (Cap., I) S.2

(2).

4. The Constitution (Consequential, Transitional, and Temporary

Provisions)
Act. 1984 55. 3 and 5.

20
1.0 IMPORTANT SOURCES OF LAWS APPLICABLE IN TANZANIA
MAINLAND

1.1 Legal basis for the Application of various Laws and Existing Traditional
and Religious (Legal) Systems.

The Tanganyika Order in Council of 1920 which was made under the
English Foreign Jurisdiction Act of 1890 (53 54 Vict. C. 37).

The Order in Council spelled the powers of the Courts and conditions
for the recognition and applicability of the general law passed by the
colonial legislature and the various customary and religious laws of the
inhabitants of Tanganyika Territory.

The Tanganyika Order in Council, 1920 (22.7.1920)

Art 17(1) There shall be a Court of Record Styled as His Majesty's

High Court of Tanganyika. (in this Order referred to as the
High Court). Save as herein expressed The High Court shall
have full jurisdiction, civil) and criminal, over all persons
and over all matters in the territory.

Art 17(2) Subject to the other provisions of this Order, such civil and
Criminal Jurisdiction shall so far, as circumstances admit,
be exercised in conformity with the Civil Procedure.
Criminal Procedure and Penal Codes of India and Other
laws which are in force in the territory at the date of the
commencement of this Order or enacted and subject
thereto, and so far as the same shall not extend or apply
shall be exercised in conformity with the substance of the
common law, the doctrines of Equity and the Statutes of
general application .in force in England at the date of this

21
 order and with powers vested in and according to the
procedure .and practice observed by and before courts of
Justice and Justices of the Peace in' England according to
their respective Jurisdictions and authorities at that date
(unless these have been 'previously or subsequently
replaced amended' or modified by the British parliament).
Provide always, that the said common law, doctrines of
Equity and statutes of general application shall be in force
in the territory so far only as the circumstance of the
territory and its inhabitants and the limits of His Majestys
jurisdiction permit, and subject to such qualifications as
local circumstances my render necessary. (22 July 1920).

1.2 Applicability of Customary Law

Art. 24 in all cases, civil and criminal to which the natives are
parties, every Court shall be guided by native law so far as
it is applicable and not repugnant to justice to justice and
morality or in consistent with any Order in Council or
Ordinance or any Regulation or Rule made under any
Ordinance Council or Ordinance and shall decide all such
cases according to substantial justice without undue regard
to technicalities of procedure and without delay.

The latter provisions were to be observe by Courts which were established

under the Courts Ordinance of 1920 (No. 6 of 1920 Cap. 3 Laws of
Tanganyika) and the Nature Courts Proclamation of 1925 (No. 7 of 1925).

-From about 1929 to 1961 the time of Independence there were two parallel
systems of Courts- Tanganyika. The Central Courts System headed by English
trained personnel and applying English Law as modified by local statutes and

22
conditions; while Local Courts, staffed by African personnel applied
Customary and Islamic Laws (Sawyerr 1974:226).

On attainment of Independence in 1961, The Tanganyika Order in Council

1920 was repealed and replaced by the Judicature and Application of laws
Ordinance (Cap. 453). Maintaned the general reception Clause and
maintained the conditions under which customery law was to apply
(Repugnancy Clause)

S.9 of Cap. 453 provided:

S.9 (1) Customary law shall be applicable to, and Courts shall exercise
jurisdiction in accordance therewith in, matters of a civil nature:

(a) Between members of a community in which rules of customary

law relevant to the matter are established and accepted. or
between a member of one community and a member of one
community if the rules of customary law of both communities
make similar provisions for the matter; or

(b) relating to any matter of status. of, or succession to, a person

who is or was a member of a community in which rules of
customary law relevant to the matter are established and
accepted; or

(c) in any other case in which, by reason of the connection of any

relevant issue with any customary right or obligation, it is
appropriate that the defendant be treated as a member of the
community in which such right or obligation obtains and it is
fitting and just that the matter be dealt with in accordance with

23
 customary law instead of the law instead would otherwise be
applicable.

Except in any case where it is apparent, from the nature of any relevant act
or transaction, manner of life or business, that the matter is or was to be
regulated otherwise than by customary law:

Provided that:

(i) Where, in accordance with paragraph (a), (b) or (c) of this sub-
section customary law is applicable to any matter, it shall not
cease to be applicable' on account of any act or transaction
designed to avoid, or for an unjust purpose, the applicability of
customary law; and

(ii) Nothing in this subsection shall preclude any court from applying
the rules of Islamie law in matters of marriage, divorce,
guardianship, inheritance, wakf and similar matters in. relation to
members of a community which follows that law.

In 1963 Cap. 453 was amended by the Magistrates Courts Act 1963 (Cap.
537) (No. 55 of 1963) of which schedule VI covered the application of
customary and Islamic laws. The said schedule modified S. 9 of Cap. 453 the
contents of which can now be found in the decision of the Court of Appeal
for Tanzania in Maagwi Kimito v. Gibeno Werema, Civil Appeal No . 20 of
1984 (C.A.) p. 3f.

According to the provisions of Cap. 453 - District courts were empowered to

submit to the Minister in charge of Local Government, considerations,
recommendations for modification of any local customary law. In exercise of

24
these powers, a draft code of customary law was submitted in 1963 to the
Minister for consideration and approval - The code is known
as the Declaration of Customary Law GN. 436 of 1963, and came in force in
1963.

G.N. 279 of 1963 covered matters of personal status i.e. marriage, divorce,
status of .children; while G.N. 436 of 1963 covered guardianship succession
and inheritance

In 1971 the Law of Marriage Act (No.5 of 1971) was passed with the effect
that it superseded most of the customary and /Islamic Laws relating to
marriage divorce and the status of children. (This was a further modification
to Cap. 453). In 1984 the Magistrates Courts Act. 1963 was repealed. and
replaced with modifications by the Magistrates Courts Act, 1984 Schedule IV
contains conditions' for the applicability of customary law.

Customary law is defined in the Interpretation of Laws and General Provisions

Act Cap. I. S 2(2).

1.3 How Various Systems of Law are Regulated in Tanzania in

Mainland:

i. General Statutory Law - is applicable to inhabitants within the

territorial limits of Tanzania (Mainland) in respect of all matters not
covered by other systems or not directly excluded from such coverage.

ii. Customary law:

S. 9(1) of Cap. 453.

Customary law shall be applicable to, and courts shall exercise jurisdiction in
accordance therewith in matters of Civil Nature.

(See also S. 18 Magistrate Courts Act, (No. 2 of 1984):

25
 (a) between member of a community in which rules of customary law
relevant to the matter are established and accepted, or between a
member of one community and a member of another community if the
rules of customary law of both communities make similar provision for
the matter; or

(b)relating to any matter of status of or succession to, a person who is or

was a member of a community in which rules of customary law
relevant to the matter are established and accepted; or

(c) in any other case in which, by . reason of the connection of any

relevant issue with any customary right or obligation obtains and it is
fitting and just that the matter be dealt with in accordance with
customary law l instead of the law that would otherwise be
applicable;

Exception to the above general rule appears in the cases where:

It is apparent from the nature of any relevant act or transaction manner of

life, or business, that the matter is or was to be regulated otherwise than by
customary law.

A stranger can become a member of a 'given customary community by his

adoption of the way of life of a given customary community or by being
accepted by a community which practices a specific customary law. Such
adoption of customary law or acceptance into a customary law group may be
effective either generally or be specifically limited for certain purposes. ,
Adoption of a new mode of life or being accepted by a given community,
shall be considered that a person has ceased to be a member of his former
of his former community either generally or for specific purposes (Sawyer
1974: 227).

26
A court deciding an issue involving customary law shall apply the customary
law prevailing within the area of its local jurisdiction or if there is more than
one such law, the court shall apply the law applicable in the area in which
the act, transaction or matter occurred or arose unless for some other reason
the court is satisfied that the proper customary law to be applied is some
other law.

(See also S. 2 of 4th both Schedule to Magistrates Courts Act, 1984).

See also S. 19 (1) Magistrates Courts Act, 1984)

The customary law which is to be applied should not have been abolished,
prohibited. punishable, declared unlawful or expressly or impliedly disapplied
or suspended by any Act or Ordinance. (Appendix A).

iii. Islamic Law:

(S. 9(1)(iii) of Cap. 453.

Courts shall apply the rules of Islamic Law in relation to members of a

community which follows Islamic Law.

Matters: Marriage, divorce, guardianship inheritance, succession. wakf and

other matters related thereto.

Note:

1. Predominance of Islamic Community in Tanzania: large townships

located op. the coast - Dar es Salaam, Tanga. Mtwara. Towns located on

27
 the Old trade route of Tabora and 'Kigoma the Islamic Community
constitutes about 1/3 of the population.

2. Most customary Islamic law governing marriage arid divorce is

contained in the Law of Marriage Act, 1971. (SS. 9, 14, 16, 25(1) (c),
38(1)(c), 38( i(j) l07(3)(c) and 116(b).

1.4 The Legal Status of the above Systems:

Sources of Civil Law

Under Arts. 62-65 of the United Republic of Tanzania Constitution, 1977 the
Parliament (as a supreme law making body is established.

64. (1) All legislative power in respect of all matters relating to the Union and
to Tanzania mainland shall be vested in the Parliament.

There are other bodies which are empowered by Parliament to legislate i.e.
the executive branch legislates through subsidiary legislation.

Sources of Customary Law.

(1)Declaration of customary law made by District Councils under S. 9A of

Cap. 453..

(2)The Interpretation of (1) above and other sources such as textbooks

and elementary customary law proved as facts from civil
proceedings.

28
 (3)Authoritative textbooks and commentaries Written by distinguished
authors on customary law.

S. 9A (1) A District Council may, and where the Minister so requires, shall
record in writing a declaration of what in the opinion of the
Council is the local customary law relating to any subject either
as applying throughout the areas of the council or any specified
part thereof and submit such declaration to the Minister.
S.9A (2) District Council may if in the opinion of the Council it is expedient for
the good government and welfare of the area, submit for the
consideration of the Minister, a Recommendation for the
modification of any local customary law whether or not a
declaration has been recorded and an order made under the
provisions of this section in respect of such local customary law.
Relating to any subject either as applying throughout the area of
the council or in any specified part thereof.

3). If the Minister is satisfied that a declaration recorded under

subsection
(1) accurately, records local customary law with respect to' the
subject to which it relates, or that a modification recommended
under sub-section (2) is expedient
and such local customary law or modification is not incompatible
in its terms or by necessary implications with any written law,
he may by order direct that such declaration or such modification
to be the local customary law in respect of the subject and Within
the area to which it relates and shall cause such declaration or
modification to be published in such a manner as he may deem
expedient.

29
 (4). Notwithstanding the foregoing provisions of this section, no
declaration or
modification shall include -any provision purporting to declare
any act, or riminal, and the . Minister may amend any declaration
deemed to have been made under this section in order to-
remove any such provision.
(5)
In this section district council llleaI1S a district established under
the Local Governments Ordinance (Cap. 333). (See: The Local
Government (District
Authorities) Act, 1982 (Act No.7 of 1982).

"Minister" means the minister for the time being responsible for
legal affairs.

S. 37(3) ... in the. Exercise of their-respective Jurisdictions the High Court and
district courts shall not refuse to recognize a rule of customary law on the
ground that it has not been established by evidence, but may accept any
statement thereof which appears to it to be worthy of belief which is
contained in the record of the proceedings, in or before any lower court
which has exercised jurisdiction in the case, and from any other source which
appears to be credible, or may take judicial notice thereof. See S. 59( l)(a)
Evidence Act, 1967.

1.5 Source of Islamic Law:

Cap. 453 permits Courts to apply Islamic Law but it does not say where this
law is to be found.

Three sources of Islamic law which are relied upon:

30
 i. Authoritative text books on Islamic Law
ii. Evidence by witnesses or experts as to what the law is,
iii. Judicial pronouncements made by the supreme courts.
. .
To remove difficulties of finding a definite body of Islamic Law - a Code of
Islamic Law was drafted and came to be. known as: The Restatement of
Islamic Law GN No. 222 of 1967. It has the status of Subordinate legislation
and is used along with other sources.

In cases of marriage and divorce customary Jay! has been superseded by the
Law of Marriage Act (Ref.) Cap. 453 S. 9(3A) except where it specifically
permits the application of Islamic Law. i. e. S. 25(1)(c) of the Law of
Marriage Act 1971.

"a marriage may, subject to the provisions of this Act, be contracted in

Tanganyika if the intended husband is a Muslim, in Civil form. or in Islamic
form".

1.6 Other Statutes Governing Specific Aspects of Islamic Law:

i. Mohamedan Estates (Benovelent Payments) Ordinance, Cap. 25.

ii. Administration (Small Estates) Ordinance, 1922, Cap. 30.

iii. Succession (Non Christian Astatics ) Ordinance , Cap . 112.

iv. Walk Commissioners Act, Cap. 109

1.7 Source of Hindu Law

Cap. 453 empowers courts to apply Hindu Law.

31
Three Main sources of Hindu Law are statutory sources authoritative texts
and case law.

1.8 Statutory sources include Legislation Governing Specific

Matters

1. Cap. 112 which regulates succession to property of then Non.

Christian Ascetics in Tanganyika.

2. The Law of Marriage Act, 1971 provides for marriages to be conducted

in accordance with rites of a specified religion.

1.9 Judicature and Application of Law Ordinance Cap. 453,

S. 2(2):

Subject to the provisions of this Ordinance the jurisdiction of the High Court
shall be exercised in conformity with the written Laws which are in force in
Tanganyika on the date on which this Ordinance comes into operation
(including the laws applied by this Ordinance) or which may here after be
applied or enacted and, subject thereto and so Jar as. the same shall not
extend or apply, shall be exercised in conformity with the substance of the
common law , the doctrines of Equity and statutes of general application in
force in England on the 22nd of Ju1ly, 1920... Provided always that the said
common law.doctrines of Equity and statutes of general application shall be
in force. in Tanganyika only so far as circumstances of Tanganyika and its
inhabitants permit and subject to such qualifications as local circumstances
may render necessary.

1.10 Interpretations and General Clauses Ordinance Cap. 1:

32
S.2 Written Law" means all Acts of the parliament of (Tanzania)
Ordinance, Acts of the Community, Subsidiary Legislation Acts of the
Parliament of the United Kingdom extended expressly or by necessary
implication or applied to (Tanzania) Orders in Council and"1ndian Acts
applied to (Tanzania).

1:11 The Constitution (Consequential. Transitional and Temporary

Provisions) Act, 1984.

S. 3 "Existing Law" means the written and unwritten law of. Tanzania as it
exists immediately before the Commencement of the Act (lst March
1985.), and for the avoidance of doubt it is hereby declared that it
includes any law enacted or made by any enactment or instrument
passed or made before and coming into operation on or after, the
commencement of the Act.
S. 5(1)
Without prejudice to the repeal revocation or amendment of any
existing law, with effect from the commencement of this Act the
existing law shall continue to be the law of Tanzania after the
commencement of the Act except in so far as it is amended modified,
repealed or revoked by competent authority or any provision of it
expires after the commencement of this Act.

However, the existing law shall be construed with such modifications,

adaptations, qualifications and exceptions as may be necessary to
bring it into conformity with the previsions of the Act or as provided in
this Act: and for avoidance of doubts it is hereby declared that, subject
to the modifications, adaptations and qualifications and exceptions
with which the existing taw shall be construed and subject also to the
provisions of this Act, the operation of the existing law after the

33
 commencement of this Act shall not be affected by the amendment of
the constitutions.

(2) Notwithstanding the amendment of the constitution and in particular.

The justifiability of the provisions relating to basic rights, freedoms and
duties. no existing law or any provision in any existing law may. Until
after three years from the date of the commencement of the Act, be
construed by any court in' the United Republic as being of
unconstitutional or otherwise inconsistent with any provisions of the
constitution.

(3) The President is empowered to make any amendments to the existing

law and publish them in the Gazette before 30th June 1985. On the
Extent m the application of Customary Law in Tanzania Today refer to
the case of

Maagwi Kimito v. Gibeno Werema Civil Appeal No. 20 of 1984, (CA).

1.12 The Judicature Act, 1967, Cap. 8(K)

"S. 3(1) The Jurisdiction of the High Court, the-Court of Appeal and of all
subordinate Court shall be exercised in conformity with-

(a) The Constitution

(b) Subject thereto all other written laws, including the Acts of Parliament
of the United Kingdom cited in Part I of the schedule to this Act.
Modified in accordance with Part III of that schedule; (c) subject thereto
and so far as those written laws do not extend or apply, the substance
of the Common Law, the doctrines of Equity and the statutes of
general application in force in England on the 12th August, 1987, and

34
 the procedure and practice observed in courts of justice in England at
that date; but the Common Law. doctrines of equity and statutes of
general application shall apply only so far as the circumstances of
Kenya and its inhabitants permit and subject to such qualifications as
those circumstances may render necessary .

"S.3 (1) The High Court, the Court of Appeal and all subordinate Courts
shall be guided by African Customary Law in Civil cases in which one or more
of the parties is subject to it or affected by it, so far as it is applicable and is
not repugnant to justice and morality, or inconsistent with any written law,
and shall decide all such cases according to substantial justice without indue
regard to technicalities of procedure and without undue delay.[NB: Indebted
to Prof .B.A. Rwezaura who was the first author on these lines].

35
 2.0 THE MODERN LAW REVIEW

Volume 22 March 1959 No.2 A.L. Goodhart (K. B.E.Q.C., Master of University
College. Oxford)

Professor Montrose and Mr. Simpson have now on four occasions expressed
views concerning the ratio decidendi of a case.7 I would have hesitated to
intervene in this gladiatorial combat if it had not been for the fact that both
of them referred at considerable length to may article Determining the
Ration Decidendi of a Case. 8It is not may purpose to discuss in the present
article the point on which they seem to disagree because I am not certain
that I have always understood their arguments. I am concerned with
narrower and more personal matter. Both of the learned writers are in
agreement that the conclusion reached in my article are unsatisfactory.
Professor Montrose does soon the ground that they conflict with the
classical" theory which he accepts as being correct. while Mr. Simpson is of
the opinion that my theory is substantially the Same as the "classical", one
which he regards as open to criticism.

The learned writers are not in accord concerning either the existence or the
nature of the "classical" theory, but they are in happy agreement concerning
the content of my doctrine relating to the binding precedent. Unfortunately,
from my standpoint, they both state my theory in a form which I find it
impossible to recognize, as it omits what I regard as the essential point of my
thesis. For some reason, which I find it difficult to understand both the
learned writers, instead of referring to my article directly. are content to

7
L. Montrose, "Ratio Decidendi and the House of Lords" (1957) "20 M.L.R. '124; A.W.B.
Simpson, "The Ratio Decidendi of a Case" (1957) 20 M.L.R. 413. J.L. Montrose, "The Ratio
Decidendi of a Case" (1957) 20 M.L.R. 587; A.W.B. Simpson, "The Ratio Decidendi of a Case
(1958) 21 M.L.R~ .155.

8
Essays in Jurisprudence and the Common Law, pp. 1-26 (1931)

36
quote a single sentence. taken out of its context, from Dr: Glanville Williams'
valuable book Learning the Law. Thus in his First article9 Professor Montrose
says that "Glanville Williams accurately summarizes Good harts' thesis in
the following sentence: The ratio decidendi of a case can be defined as the
material facts of the case plus the decision thereon: Learning the Law 3rd
ed., 1950, p. 57." This single sentence is also accepted by Mr . Simpson as a
correct statement of my view. As I do not agree to that, taken by itself, this
gives accurate summary of my thesis, it may perhaps clarify matters if 1
State as briefly possible what I. did say in may article.

I began by pointing out that although nearly all the books on jurisprudence
from the time of Austin onward, had stated that it was necessary to
distinguish between the general principle of a case which constitutes the
ratio decidendi (and the concrete decision, few attempts have been made
to state any rules by which these general principles can be determined. The
phrase "ratio decidendi" is misleading because me reason which the judge
gives for his decision is not binding and may not correctly represent the
principle. I cited a large number of cases in which the reasons given for the
decisions were obviously wrong or were based on misunderstanding of legal
history, but nevertheless the principles established by these cases were valid
and binding.10 Moreover, there were numerous cases in which no reasons
were given but this did not affect their authority as a precedent. Oliver v.
Saddler and Co.11 is a modern illustration of this Secondly, 6 it is not the rule
of law set forth by the court, or the rule enunciated, as Halsbury puts it,
which necessari1y constitutes the principle of the case.. Here again, there
may be no rule of law pronounced in the judgment, or the rule when stated
may be too wide or too narrow. In the appellate courts the various judges
may set forth different rules of law, but nevertheless each of these cases

9
p .125
10
Pp 2-4
11
(1929) AC.584

37
must contain a principle which is binding in future cases. Thirdly, 12 the ratio
cannot be found in the facts of the case together with the decision reached
on those facts. At the time when I wrote my article there was an influential
American school of thought which he1d that "Not the judges' opinion, but
which way they decide cases, will be the dominant subject-matter of any
truly scientific study of law."8 This is an attractive theory because under it,
as I said, 9 'We can ignore the vocal behavior of the judge which sometimes
fills many pages, and concentrate upon his non-vocal behavior, which
occupies but a few lines." I pointed out that, unfortunately, this theory is
based on the fallacy that the facts of a case are a constant factor, and that
the judge's conclusion is based upon the fixed premise of a given set of facts.
The crucial question, however, always - is What facts are we talking about?"

Having rejected these methods of establishing the ratio decidendi, I

suggested that the principle of the case could be found by determining (a)
the facts treated by the judge as material, and (b) his decision as based on
them. I stated this as follows 13: "The judge, therefore, reaches a conclusion
upon the facts as he sees them it is on these facts that he bases his
judgment, and not on any others. It follows that our task in analyzing case is
not to be state the facts and the conclusion but to state the material facts as
seen by the judge and his conclusion based on them.

It is by his choice of the material facts that the judge creates law I was
careful to italicize the words I considered to be of particular importance. I
then suggested various rules which would be of help in determining these
material facts. 'Of these the most important is the rule that 11 "the
Reasons given by the judge in his opinion, or is statement of the rule of law
which he is following, are of peculiar importance, for they may finish us with

12
PP 9-10
13
P 10

38
a guide for determining which facts he considered material and which
immaterial."

Finally 12 I suggested that if in an appellate case there are several opinions

which agree as to the result but differ as to the material facts, then the
principle of the case is limited so as to fit the sum of the facts held material
by the various judges or by the majority of them. This summary of my theory
must make it clear that I placed all my emphasis on the material facts as
seen by the judge, and not on the material facts as seen by anyone else.
With this explanation as an introduction we can now turn to the debate
between Professor Montrose and Mr. Simpson.

In-his first article Professor Montrose, after pointing out that in my theory the
ratio decidendi, of a case-is not to be found in the rule of law stated by the
judge, holds that this is in conflict with the "classical" view which

10. p. 10.
11. p. 18
12. P. 26

regards the ratio as "the principle of law propounded' by the judge as the
basis of his decision." He then says13:

"The classical view may be regarded as true even though the principle
stated by the judge is subsequently held to be too broadly expressed
as a binding rule of law. There is abundant authority for reading a
judgment secundum subjectum material. The important question is
whether the proposition propounded by the judge may, so far as its
binding character is concerned, be entirely ignored. That it can be so
rejected is pace Paton the thesis of Good hart."

39
With great respect this statement of my thesis is, as I have already
Pointed out, based on a misconception. My view is that the principle stated
by the judge may not by itself state the binding rule of law but I made it
abundantly clear that it cannot be "entirely ignored" because it may
constitute an essential step in determining what are the material facts as
seen by the judge. A striking illustration of my thesis can be found in
Donoghue v. Stevenson 14 Lord Atkin stated the broad principle of law as
follows15 You must take reasonable care to avoid acts or omissions which
you can reasonably foresee would be injure your neighbor." This statement
of the general principle cannot in may view be accepted as a binding rule of
law, as has been show in a number of subsequent cases where it has not
been applied.16 On the other hand, it cannot be ignored for it is of the
greatest importance in furnishing a key
to the determination of the material facts as stated thereafter by Lord
Atkin.17 It is in this statement of the material facts and the conclusion based
on them that the ratio decidendi. of the case can be found.
p. 125, n. 6.

Mr. Simpson begins his note18 by stating that the Good hart theory "... is
said by Professor Montrose to be accurately summed up by the proposition
that the ratio decidendi of a case can be defined as the material facts of the
case plus the decision thereon." Perhaps some confusion might have been
avoided if Mr. Simpson. Instead of relying on Professor Montrose's
interpretation of Dr .Glanville Williams' brief summary of my thesis, had
referred to the thesis itself. Mr. Simpson, as I understand it, argues that
where the judge does explicitly state a principle of law, this constitutes the
ratio decidendi under the classical theory, and that my theory is
indistinguishable from it. I must confess that I have found some difficulty in
following the argument by which this conclusion is reached. He says that 19
"a rule of law will always be found to contain two parts; the first specifies a

40
number of acts and the second specifies the lega1 result or conclusion which
ought to follow whenever these facts are found to co-exist I assume that
this means that Lord Atkin's statement concerning the duty of care to ones
neighbor can be translate to read.
'The defendant has failed to take reasonable care to avoid injuring the
plaintiff in a foreseeable manner. He must therefore pay damages for the
injury he has caused." Mr. Simpson then continues:

When therefore, a judge states a rule of law, and treats it as applicable

to the case before him, the applicabi1ity must depend upon his finding
that the material facts of that case correspond precisely to the facts
specified in that rule. And, this being so that the conclusion or result
specified in that rule ought to follow."

It is here that I find great difficulty in following the argument, because,

although it is true that the judge's statement of law must be assumed to
relate to the material facts of the case it does not follow from this that it
corresponds precisely to them. For one thing, it may be far wider than" the
material facts themselves.

Mr. Simpson continues by saying:14

"It seems therefore that Professor Goodhart, having said that the
proposition of law propounded by the judge may be ignored in
determining the ratio decidendi, and having advanced weighty
arguments tending to show that such propositions make unsatisfactory
rationes decidendi, fails to see that his own arguments make it
obligatory that such a proposition should not be ignored. His own
theory is just as much open to the, same criticism as he and others
14
P 415

41
 have directed against the classical theory - criticism to which there has
been as yet no satisfactory reply."

I am not certain which theory Mr. Simpson considers to be "the classical

theory." but I assume that he is referring to the one which regards the
statement of law to be the binding principle of the case. I do not know who
the "others" are who have criticized this theory, but my criticisms were (a)
that every Case must contain an ascertainable principle of law, even though
there may be no opinion delivered by the judge. This point is ignored by the
"statement" theory. (b) That the statement of law may be too wide or too
narrow. Neither or these criticisms is applicable to my theory, based as it is
on the material facts of the case as seen by the judge, however subject it
may be to other: possible criticisms not referred to by Mr. Simpson.

In his second article Professor' Montrose begins 15 by pointing out again that
he accepts as accurate Dr. Glanville Willia.ms' summary of my theory but he
fails to mention that this single sentence is part of a whole chapter in which
it is made clear that the material facts are those seen by the judge. He then
adds to the difficulty of the problem by stating16 that "the terminology
whereby 'ratio decidendi' signifies the rule propounded by the judges should
not be allowed, to be used to beg the question whether such a rule is of
binding authority. If this is the sense in which ratio decidendi is used by
Professor Montrose, then the whole ,discussion seems to be meaningless,
because when other writers discuss the question whether the rule of law
stated by the judges constitutes the ratio decidendi of a case they are
discussing whether or not this statement is of binding authority in future
cases. If ratio decidendi means nothing more than the rule propounded by
the judges, then it is a singularly unhelpful and unnecessary phrase. The

15
P 587
16
P 588

42
point at issue is whether these rules, thus propounded, are to be regarded as
binding. i.e. do they constitute the ratio decidendi of the case?

Professor Montrose then says:17

"It is convenient here to indicate the nature of my agreement with
Simpson in his criticism of Good hart. Good harts article asserts in the
first part that the judge's actual reasoning may be ignored in
determining what the rule of law established by the case is. In me
second part however he asserts that the later judge must take into
account the precedent judge's statement of what facts are to be
considered material. But the judge's statement of what facts are to be
considered material is part of his actual reasoning. Where a judge does
not explicitly pronounce the ru1e upon which he bases his decision but
explicitly says what facts he considers material, then we may have an
implicit ratio decidendi which, according to Good harts second Part,
must be followed, though from the first part of his article one is led to
believe that he does not consider any ratio decidendi. as binding."

There is no conflict between the first part of my article and the second part.
When Professor Montrose says that "from the first part of his article one is
led to believe that he does not consider any ratio decidendi as binding" it is
obvious that he must be using the phrase in a novel sense which I find it
difficult to understand. My whole article would be meaningless if I did not
consider any ratio decidendi to be binding. The whole point of my article was
based on me proposition that every case must contain a binding principle,
but that this binding principle is not necessarily to be found in the statement
of the law made by the judge.

17
P 592

43
On the other hand, I am in agreement with Professor Montrose in rejecting
Mr. Simpson's view that the "classical" theory is not distinguishable from
mine. He points out that Mr. Simpson's thesis is based on the argument24
"that when a judge pronounces a rule of law as the basis of decision, he
enunciates the material facts of the case. Since this is not true, it fol1ows
that there is a distinction between the rule of law which a judge may happen
to propound, and a rule constructed from the material facts of the case and
the decision on them, though of course, in some cases the pronouncement
may coincide with the construction."

In his reply, Mr. Simpson, after pointing out 18 that Professor Montrose defines
the phrase ratio decidendi in an unusual way, discusses the question
whether there is a distinction between the classical and the English theory of
precedent, and what Professor Stone thought of this in his book The Province
and Function of Law. As I am doubtful whether it can be said with any truth
that there is a definite classical theory or a precise English theory as so little
has been written on this subject in the past, I am not certain ,that this
discussion is of much value. It is of interest, however, to note that the
learned writers seem to have reconstructed Stone's almost as thoroughly as
they have done mine. Thus Mr. Simpson says:19

"On p. 593 (1957) 20 M.L.R. I see that according to Professor Montrose,

Stone20, pointed out that the Good hart theory is one which says that
the rule of law for which a case is of binding authority is not one which
is pronounced. Explicitly or implicitly, by the judge in the precedent
case, but which is constructed by later judges. 28 I find this hard to
reconcile with his statement a few lines further up that Stone nowhere
refers to the classical theory."

18
P 155
19
P 159, n.21
20
Op cit p 187

44
I am not concerned. With the question whether Stone did or did not refer to
the classical theory. but I cannot find in Stone's book the statement that
according to my theory the rule of law for which a case is of binding authority
is constructed by later judges. It would be surprising if he had said so,
because it is in direct conflict with my view that the principle is based on the
material facts, determined expressly or implicitly, by the judge or judges in
the precedent case. It certainly does not follow from this that the principle of
the precedent case "is constructed by later judges" whose function it is to
interpret and not to construct. Similarly, judges must interpret statutes, but it
would be misleading to say that they are therefore constructing them. To
take a non-legal analogy, a critic who interprets a poem cannot be described
as constructing it although other critics may disagree with his interpretation,
just as judges in subsequent cases may disagree concerning the rule of law
established by the precedent one

As so may references are made to Stone in these articles it may clarify the
discussion if I point out the actual grounds on which he criticized my
"ingenious view. He does so in a note,21 because "since even its learned
author could not claim that his rules describe the actual uniform operation of
English courts a full consideration is not here called for." As there is no actual
uniform operation of English courts concerning the application of precedents
it would seem to follow that all theories on this point. Including those
expressed by Professor Stone, must be invalid. I did not purport to establish
any fixed rules which must be followed by the courts, for any such attempt
would be as pointless as it would be egoistical. I was merely trying to give a
guide to the method which I believe most English courts follow when
attempting to determine the ratio decidendi of a doubtful case.

Stone then says: "Further his rules for determining the materla1 facts, are
artificial and in part indeterminate, and requiring guesses as to what facts
21
P 187, n.219

45
the courts tacitly took as material. They would thus leave the ratio in many,
if not in most, appellate cases a matter for variable judgment even if they
were accepted." If it were possible to devise a method by which all
precedents would become determinate, then the difficulties of interpretation
would disappear, but I believe that this is a vain hope. It is not a valid
criticism of a system, therefore to say that some precedents will always
remain indeterminate. This is due to the subject-matter itself, and not to the
system which is applied to it. Guesswork must always play a part in legal
interpretation: this is what makes the law so interesting.

I am not certain what is covered by Professor Stone's sentence, which reads:

"Reasons given and propositions of law formulated in further decisions are,
for instance, no less influential, even if they are no more conclusive than the
facts." If this' means that further decisions are frequently required before the
scope of a principle is finally determined, then I am in complete agreement
with it, but this does not mean that, each 'case ought not to be analysed as
precisely as possible. When we take one step we may not be certain how far
this will u1tlmately lead us, but it is useful to know in what direction we are
headed. Paton's metaphor is a sound. one30: "One case, so to speak, plots a
point on the graph of tort, but to draw the curve of the law we need a series
of point.

Perhaps I may finally point out that the present debate illustrates my thesis
concerning the essential importance of establishing the material facts on
which a conclusion may be based, because much of the confusion in these
articles could have been avoided if there had been more precision in the
various references. These may be' described as the material facts under
discussion.

46
 LECTURE THREE

COMMON LAW CASE TECHNIQUE

1.0 INTRODUCTION

The Development of the Law of Negligence.

According to Fleming the Law of Torts entered its second phase around the
turn of the 19th century. The whole of the 19th century saw an expansion of
legal protection to persons who got injured on the country roads and city
streets; along rail roads and in factories. But as it will be noted courts tried to
use the so-called antiquated rules in order to break through the narrow
compass within which the law of negligence in its embryonic stage had been
of gestating. The Pandora's Box called for careful handling lest h, the familiar
. phrase destined to become the shop-soiled badge of the timorous souls
who avoid "the floodgates of litigation". In the cases to be examined, the
judges tried all they could to rationalize the competing demands namely, the
expanding industry with its huge turn over (in terms of capital formation) and
the risks and dangers to life associated With such developments. The law
had to, be extended to cover strangers.

Torts must be understood as civil wrongs. The conceptual development of

negligence will be examined as having resulted from a process. A process
being a whole compendium of argumentation, methodological in a historical
context, which produced legal rules principles and standards.

Concepts were the necessary elements in the formulation of Legal rules,

principles standards. As will be noted, the law of negligence has evolved
from such concepts as: contract. fraud. dangerous instruments, doctor-

47
patient relationship actual knowledge of the consumer, fiduciary relationship,
occupier of premises, proximity (physical or legal) etc.

The development was not straight but manifested itself in a circular motion
as Professor Edward Levi has characterized it. In the first stage was the
creation of a legal concept which was built up as cases were compared. In
the second stage the concept became more or less fixed and through
reasoning by example items were c1assified inside and outside the concept.
The third step saw the breakdown of the concept when reasoning by
example moved far ahead that reference to a particular word was no longer
necessary. Thus emerged a single concept known as negligence meaning
carelessness. This general concept became a factor in establishing liability as
the law became more and more sophisticated.

The process consists of the following aspects analogy induction, deduction

and the shifting of categorizations, rules, principles, standards and policy.
The policy issues can be seen through the statements of the Law Lords or
judges like "proper pigeon hole", "there 'was no duty" and "the damage was
too remote". Through such policy statements one can be able to assess the
ideological inclination in law.

1. What is Meant by the Terms: Analogy, Induction and Deduction?

Analogy: An argument by analogy is one in which similar cases are

considered (similarity of cases considered). The problem is usually that what
may be considered to constitute similarity may not be true or real in life.

This type of reasoning has been described by Professor Levi as The basic
pattern of legal reasoning". He does not call it analogy but reasoning by

48
example. Such type of reasoning moves from case to case. The judge has a
duty to determine the similarity or difference in the cases under
consideration. Where case law is being considered, the judge is not bound by
the statement which was laid down by a previous court or 9 judge as a rule
of law binding on him to follow. The statement is considered to be mere
dictum What the present judge intends to do with such dictum is of much
importance.

In analogy the classification of concepts changes as the classification is

made. This is an imperfect form of reasoning Following it to its logical ends
one notices that rules change as they are applied to new situations.

Importance of reasoning by analogy or example:

(a) It indicates the hold which the law process has on the litigants.

(b)Shows the decisive role of common ideas of the society and the
distinction made by experts in shaping the law.

(c) Brings into focus important similarity and difference in the interpretation
of case law statutes and the constitution of the nation.

Induction: - a process of reasoning which deals with empirical statements. It

includes a process of reasoning from particular cases to a general rule.
Inductive reasoning is a process of "pulling together" It is sometimes called
synthetic i.e. the building up of a general rule from many particular cases.

Deduction:- a process of reasoning from general rules to other general rules

or to particular cases. It includes arguing from the general to the particular
and cases where one is drawing out what is in the premises to form a
conclusion. It is often called analytic.

49
In discussing material sources of law it was stated that Judicial Decisions or
Precedents are a source of law. Theoretically it is contended by both
command law and continental law lawyers that in fact Judges do not make
law they administer the law as they find it. Such an assertion is consistent
with the strict doctrine of separation of powers that it is parliament which
makes law.

Practice has shown that, to say that Judges do not make law is a myth. In
reality the decisions by courts (Judges) at Appellate level are of great legal
effect as it will be discussed. Judicial decisions embrace authoritative
determination of the facts (minor premise of a syllogism) subsumed by a
specific rule of law or rules of law (the major premise) and these two produce
a conclusion or judgment.

In the process of applying pre- existing rules of law to particular cases judges create or
reshape legal rules

When examining judicial decisions as a source of law the following notions

or concepts will be also examined: Stare decisis the doctrine which was
developed under the common law which directs courts to adhere or stand by
earlier decisions ,whenever there is simi1aty of facts in the case to be
decided and an earlier case (precedent case).

The doctrine of Precedent requires that judges are bound to follow a previous
decision and that appellate courts may overrule previous decisions.

50
The Rule of the case i.e. the ratio decidendi and its opposite Obiter dicta. We
intend to learn how these can be extracted from a judgment. Together with
this is an exercise of writing all abstract or a case note.

Legal Reasoning - an Endeavour will be made to learn how judges have

employed logic in deciding matters before them. This will be done through an
examination of cases from which the concept of Negligence was established.

The judicial process will be seen as a complex of judicial structure consisting

of numerous discrete rules, ana1ytical techniques, and attitudes towards the
work of lawyers and judges.

2. STARE DECIS

This term has two distinctive meanings namely: that prior decisions must be
fallowed and to follow prior decisions and nothing else. The implications of
the former are: there is certainty in the applicability of the law to future
transactions (certainty), justice must be done according to the law and not
the whims of people (justice according to law) and following previous
decisions provides a measure of flexibility in law to meet changing
circumstances (flexibility in the law).

The implications of the latter are that it is not easy to determine what in the
prior decision is to be followed because of the ambiguity of meaning of the
word decision.

A divergence of views as shown above leads to a discussion on the Rule of

the Case. What the court decides and its scope determines the rule of the
case. It has been suggested that the rule of the case can either be wide or
narrow. Such a rule should cover a group of situations as a minimum of fact,
the fact situation of an instant case and at least one other. To arrive at such

51
a conclusion a process of abstraction or generalization is involved.
Abstraction involves a classification of an element or elements common to
two fact situations put into one class drawn out from each to become the
content of a category or the subject of the proposition of law which is applied
to two cases.
Such grouping may include multitudes of fact situations so long as a single
attribute common to them all can be found. To avoid extreme situations
gradation of groups of' fact situations each with its corresponding proposition
of law is adopted.

A series of groupings of fact situations gives up a parallel series of

corresponding propositions of law, each more and more generalized as we
raced further from the instant state of facts, it includes more and more fact
situations in the successive groupings. It is a mounting and widening
structure, each proposition including all that has gone before and becoming
more general by embracing new states of facts.

Example:
In a Tort of Inducing Contract the position can be as follows:

(i) A promises to marry B, B tells her mother about the promise but the
mother induces B not to ma.rry A. A Sues B's mother. In the course of
hearing the matter it is discovered that there is a rule of law which
permits mothers to intervene with marriage arrangements by their
daughters which states:
"Where a mother persuades a daughter not to marry a person of her
choice the prospective husband cannot recover. The court can use
such a rule to determine the case above. The rule can only apply to
cases which involve mothers inducing their daughters in matters of
marriages which such mothers do not approve of. This is a narrow rule.

52
 (ii) There can be another narrow rule covering the relationships between
fathers and sons and such a rule can only apply to fathers and sons.

(iii) To have a wider rule the facts similar to case (1) and (ii) have to
be identified and a general rule relating to parents must be developed.
Such a rule will state as follows: "Whenever a parent persuades a child
to break a contract of marriage, the potential husband cannot recover
anything if the promise is broken.

From the foregoing the following rules can developed:

(a) Fathers are privileged to induce daughters/sons to break
promises.
(b) Parents are so privileged.
(c) Parents are so privileged as to both daughters and sons.
(d) All persons are so privileged as to promises to many. .
(e) Parents are so privileged as to all promises made by their
children.
(f) All persons are so privileged as to all promises made by anyone.

Where on the above gradation of propositions can we take a position and

say: This position or proposition is the decision of the case within the
meaning of the doctrine of stare decisis?

Is it possible for a proposition of law which is so broad to become useful at

all?

53
 LECTURE FOUR

DEBATE ON DETERMINATION OF THE RATIO DECIDENDI

1.0 INTRODUCTION

Granville Williams22 starts off to discuss this matter of making an important

observation about the practice by English Courts:
English courts make a habit of following their previous decisions
within more or less well defined limits- This is called the doctrine
of precedent.

In trying to show what all this means then he introduces important concepts
like the ratio decidendi. He says that it is not easy to extract ratio decidendi,
even though he admits that: "Finding the ratio decidendi of a case is an
important part of the training of a lawyer".

Such being the case we intend to spend some time, by looking at particular
cases decided by courts in relation to the development of the notion of
negligence as known today. The cases to be studied are only important in so
far as they help us to discover the way a ratio decidendi of a a cases is
extracted and in so far as we can also understand the process of legal
reasoning involved when judges decide cases.

In the process it will be noted that together with the extraction of the ratio
decidendi of the case is the determination of what is called Obiter dictum.
Upon what distinctions these two are based should now be examined. Ratio
22
G. Williams, Learn ing the Law, 11th Edition, Ch. 6

54
decidendi means that "part of the case that is said to possess authority",
that is to say, "the rule of law upon which the decision is founded". The
determination of such a rule is "not a mechanical process but an art that one
gradually acquires through practice and study", says G. Williams.

The technique can be generally described:

The doctrine of Precedent declares that cases must be

decided the same way when their material facts are the
same.

It is not a requirement that all the facts must be the same because it is
clearly known that in life all the facts of the case will never recur. What is
here referred to are what are called the legally material facts. It is with such
facts that the doctrine of precedent is about.

The Ratio decidendi according G. Williams means the material facts of the
case plus the decision thereon.
Example:

Where facts A, B and C exist and the court find that facts B and C are
material and fact A immaterial, and reaches conclusion X (i.e. judgment for
the plaintiff, or judgment for the defendant).
The doctrine of precedent enables us to say that in any future case in which
facts B and C exist, or in which facts A and B and C exist, the conclusion
must be X.

But where in the future case facts A, B, C and D exist, and fact D is held to be
material, the first case will not be a direct authority, though it may be of
value as an analogy.

55
What must be considered is how to determine facts which are legally
material:

There is no general criteria, one must consider each particular case.

Granville Williams uses a "running down" action an action for injuries
sustained through the defendant`s negligent driving of a vehicle.

Immaterial Facts:

The fact that the plaintiff had kinky hair, that his name was Juma, that an
accident happened on Friday - all these are not material for the rule of law
upon which the decision proceeds.

Matters for attention when extracting a ratio decidendi of a case include

(a) Legally material facts

(b) The issues as drawn by the parties to the dispute or by the court
deciding the matter.

(b) For whom the court has decided in favour may help in the
formulation of the ratio decidendi. [Holding of the court may give
direction].

In the course of the study it will be noted that the term fact is ambiguous. It
will in no way be used in a consistent manner because involved in finding a
ratio decidendi of a case is a process of abstraction.

Abstraction is a mental operation of picking out certain qualities and

relations from the facts of experience. Abstraction comes through the
perception of similarities between individual facts.

56
Example:

To a child a dog (which may be called caesier) is known by the term bow
bow" and another dog will be identified by the same term, even though it
may be known by a name different from the first one. This has been
exemplified as one of the earliest farms of abstraction, for -a child.

The process of abstraction if carried further may reveal that:

The individual dog caesar is a terrier at a higher level of abstraction, then a

dog, higher still an animal and a mammal, a living thing. Thus dog -terrier -
mammal - animal - living thing are facts at various levels of abstraction.

The ascertainment of the Ratio Decidendi will depend on the level of

abstraction from the totality of facts in a given case. The higher the level of
abstraction the wider the ratio decidendi:

The Criteria for Knowing When to Stop in the Level of Abstraction in

a Given Case:-

1. What the judge says in his judgment.

2. Our knowledge of the law generally.
3. Our common sense.
4. Our feeling on what ought to be the law.

2.0 DISTINGUISHING

57
In case there can be what are termed rationes decidendi. These may be of
ascending degrees of generality. At the same time the phrase the ratio
decidendi of a case is ambiguous. It may mean either

(a) the rule that the judge who decided the case intended to lay down
and apply to the facts or

(b)the rule that a later court concedes to have had the power to lay
down.

And because "courts do not accord to their predecessors an unlimited power

of laying down of laying down wider rules. They are apt to declare a rule as
unnecessarily for the decision before them. Such an attitude is what Glanvile
Williams has referred to as a niggling attitude towards earlier decisions.
The consequences are that a rule may be rejected.

The process of cutting down the expressed ratio decidendi of a case is what
Glanville Williams has called distinguishing of a kind. Distinguishing can
be of two types:

(1) Restrictive
(2) Non restrictive Distinguishing.
The latter is also known as genuine distinguishing.

Non-restrictive Distinguishing

This occurs where a court accepts the express ratio decidendi of the earlier
case, and does not seek to curtail it, but finds that the case before it does
not fall within the ratio decidendi because of some material difference of
fact.

58
Restrictive Distinguishing
This cuts down the expressed ratio decidendi of the earlier case by treating
as material to the earlier decision some fact, present in the earlier case,
which the earlier court regarded as immaterial.

Example:

Follow the Discussion by G. Williams Ch. 6 on Ratio Decidendi and Obiter

Dictum. Learning the Law 11th Edn.

Distinguishing plays a very important role in the legal argument. When

conducting a case in court and the other side cites a case against you. You
have two a1tematives, either to submit that the case cited was wrongly
decided and therefore, it should not be followed or to "distinguish" it, by
suggesting that it contains or lacks some vital fact when read in the light of
your client's case.

3.0 PRECEDENT SUB SILENTIO

A case is not an authority, or at any rate a binding authority, for a point that
was not raised in it, even though the facts enabled it to be raised. Bi Hawa
Mohamed v. Ali Sefu Civil Appeal No.9 of 1983 (C.A. Unreported).

OBITER DICTA

Obiter dictum is a mere saying by the way, a chance remark, which is not
binding upon future courts. It may be respected depending on the reputation
of the judge, the eminence of the court and the circumstances under which it
was announced.

59
A rule of law stated merely by way of analogy or illustration, or a suggested
rule upon which the decision is not finally rested.

An Obiter dictum is not regarded as binding because it may have been made
without full consideration of the cases on the point, and if very broad in
terms, it may have been made without full consideration of all the
consequences that may follow from it.

A ruling based on hypothetical facts. If a judge says:

I decide for the defendant: but if the facts had been properly pleaded I
should have found for the plaintiff.

The latter part is Obiter.

Per Brett MR., Heaven v. Pender (1883) 11 QBD 508.

Per Lord Esher (formerly Brett MR) in Le Lievre v. Gould.( 1893} 1
QB491

Kiriri Cotton Co v. Dewani (1960) E.A 188; [1960] A.C. 192; [1960]1
ALL.E.R 177; [1960] 1 \VLR 127.

R. F. Mboya v. Mewa Singh Mangat

Shija Maziku v. Mpembwa Nzunya (1969) HCD n. 4

Mkende s/o Kisunte (1969) HCD n. 5.

Yusufu Hussein v. R (1969) HCD n. 36

60
 R. v. madhur Kapadia (1969) HCD n. 103

R.v. Kasela Bantu & Others (1969) HCD n. 170

5.0 ESSENTIAL LITERATURE

Llewelly, The Brumble Bush. Occeana ed. Pp. 45-49, 66-69.

Oliphant, "A Return to Stare Decisis" 14 American Bart. Journal (1928)

71-73, 159.

Goodhart, "Determining the Ratio Decidendi of a Case"

40 Yale Law Journal (1930) 161-183.

Stone, 'The Ratio of the Ratio Decidendi". 22 Modem Law Review

597,603-608 (1959).

Stone, Legal System and. Lawyer's-Reasoning, Mainland Press 1968

Chs. 7 and 8.

Cross, A.R.N., Precedent in English Law, 2nd Edn. Oxford, 1968.

Geoffrey Wilson, Cases and Materials on the English Legal System.

London (Sweet & Maxwell) 1973 pp. 236-278.

Lloyd of Hampstead, Introduction to Jurisprudence. 4th Edn 1979

pp.887-893.

Lord lloyd of Hampstead/M.DA Freeman. (eds).

61
 Lloyd's Introduction to Jurisprudence, 5th Edn. London (Stevens &
Sons) 1985pp. 1100-1120 .

Dicta: Broad generalizations not directly relevant to the case being

decided.
[Louis B: Schwartz in Vol. 31 Jo. Leg. Educ. [1981] 480 at 482.

Karl Llewellyn and the Realist Movement William Twining Weldenfield and
Nicolson Reprinted 1985.

6.0 CASE LAW

There is a close connection between the emphasis placed by Llewellyn on

disputes and dispute settlement in his theory of law government and his
approach to precedent as a source of law. This is brought out by the opening
paragraph of his article on Case Law' in the Encyclopedia of social Sciences:

Case law is law found in decided cases and created by judges in the process
of solving particular disputes. Case law in some form and to some extent
found wherever there is law. A mere series of decisions of individual cases
does not of course in itself constitute a system of law. But in any judicial
system rules of law arise sooner or later out of such decisions of cases, as
rules of action arise out of the solution of practical problems, whether or not
such formulations are desired, intended or consciously recognized. These
generalizations contained in, or built upon, past decisions, when taken as
normative for future disputes, create a legal system of precedent. Precedent,
however, is operative before it is recognized. Toward its operation drive all
those phases of human makeup which build habit in the individual and

62
institutions in the group: laziness as to the reworking of a problem once
solved; the time and energy saved by routine, especially under any pressure
of business; the values of routine as a curb on arbitrariness and as a prop of
weakness, inexperience and instability; the social values of predictability; the
power of whatever exists to produce expectations and the power of
expectations to become normative. The force of precedent in the law is
heightened by an additional factor: that curious, almost universal, sense of
justice which urges that all men are properly to be treated alike in like
circumstances. As the social system varies we meet infinite variations as to
what men or treatments or circumstances are to be classed as like'; but the
pressure to accept the views of the time and place remains.

The facts: A famous passage from The Brumble Bush makes the
main point:

Where are the facts? The plaintiff`s name is Atkinson and the defendant's
Walpole. The defendant, despite his name, is an Italian by extraction, but the
plaintiff`s ancestors came over with the pilgrims. The defendant has a
schumautzer-dog named Water, red hair, and $ 30,000 worth of life
insurance. All these are facts. The case, however, does not deal with life
insurance. All these are facts. The case, however, does not deal with life
insurance. It is about an auto accident. The defendant`s auto was a Buick
painted pale magenta. He had turned around to make objection. In the
process the car swerved and hit the plaintiff. The sun was shining: there was
a rather lovely dappled sky low to the West. The time was late October on
Tuesday. The road was smooth, concrete. It had been put in by the McCarthy
Road Work Company. How many of these facts are, as we say, legally
relevant? Is it relevant that the road was in the country or the city: that it
was concrete or tarmac or of dirt: that it was a private or a public way? Is it
relevant that the defendant was driving a Buick, or a motor car, or a vehicle?
Is it important that he looked around as the car swerved? Is it crucial? Would

63
it have been the same if he had been drunk, or had swerved for fun, to see
how close he could run by the plaintiff, but had missed his guess?

Is it not obvious that as soon as you pick up this statement of the facts to
find its legal bearings you must discard some as of no interest whatsoever,
discard others as dramatic but as legal nothings? And is it not clear, further,
that when you pick up the facts which are left and which do seem relevant,
you suddenly cease to deal with them in the concrete and deal with them
instead in categories which you, for one reason or another, deem significant.
"It is not the road between Pottsville and Arlington; it is 'a highway'. It is not
a particular pale magenta Buick eight, by number 732507, but a motor car',
and perhaps even a vehicle'. It is not a turning around to look at Adoree
Walpole, but a lapse from the supposedly proper procedure of careful drivers,
with which you are concerned. Each concrete fact of the case arranges itself,
I say, as the representative of a much wider abstract category of facts, and it
is not in itself but as a member of the category that you attribute
significance to it. But what is to tell you whether to make your category
'Buicks' or 'motor cars' or 'vehicles'? What is to tell you to make your
category 'road' or 'public highway'?

7.0 THE MODERN LAW REVIEW

Volume 22 November 1959 No. 6

JULIUS STONE, THE RATIO OF THE RATIO DECIDING 23

I. Stare Decisis AND THE PROCESS OF CHANGE

23

LLM (Leeds), SJD (Hav-are). ChaIhs Projes...c:.or of Jurisprudence and InLorT'.attDr'.al Law. Univesity of Sydney.

64
POOR, indeed, must be the common lawyer who has not paused to ask, with
Lord Wright" how the "perpetual process of change" in the body of common
law "Can be reconciled with the principle of authority and the rule of stare
decisis?". Beneath the dry and niggling distinctions, the flat frustrating
contradictions, behind the wavering alternations of judicial caution and
judicial valour, coyness and courage, the lawyer of imaginative intelligence
must be conscious of the elements of a perennial mystery. He is challenged
to ask what magic at the dimension both of space and time. In the dimension
of space the English common law continues to spread, independently of the
powers of political sovereignty, over substantial parts of the globe, and, even
amidst the uncertainties of our age, its place as a major legal heritage of all
mankind seems assured. In the dimension of time this corpus juris already
approaches its second millennium of traceable history as a living system of
law.

It remains a common on assumption among most of us, even today, that the
present common law is somehow still one with that common law whose
origins we trace back into the early centuries of the modern world. We think
of it as a single system of law, somehow linked into unity throughout time.
And it is perhaps in this assumed link that we should look for the deepest
seat of mystery. Formerly, and sometimes even today, we have tended to
take for granted that the link is in whole or in part that of logical derivation.
Certain fundamental principles were always there: for new problems we have
had to draw out what was already implied in the fundamental principles. To
decide the instant case Decidendi make a specific application of these
fundamental provided the same token the rule now newly applied is deemed.
in posse if not in esse, to be a rule of the same Common law and coeval with
It. We assume (though there may also be other reasons for this) that
judiciary developed norms applied in a ' particular case have always been
the law. This rule, at the least, symbolises the common assumption. (spoken

65
or tacit) that all present and future developments in common law principles
are somehow already implicit in the common law existing hitherto.

The intelligent citizen, and certainly the intelligent lawyer, must at some
stage formulate a position on some aspects of these matters. How is it
possible that, over large segments of human relations a single body of
common law has maintained its position as a means of sound ordering in a
mid-twentieth-century world of approaching automation, of ever more rapid
movement, and massing of urban populations, as it formerly did in the vastly
different conditions of ancient agricultural, pastoral and petty industrial
society? By what magic could the common law have developed out its own
inner resources from its former to its present scope and functions? What can
be the link which allows us to think of these vastly differing modes of
adjustment as but phases of a single system of law? What can be the secret
of the remarkable capacity for growth and adaptation which has allowed a
body of principles and its assumed implications to perform at such a
tolerable level of efficiency both in primitive, petty feudal, rural and in great
modern urban civilizations? These may seem rather general and even
melodramatic questions to ask in a prologue to a technical inquiry about the
ratio decidendi of a case. But they are essential to be asked if we are to
understand the full import of the technical questions, against the vast
exciting framework of which they are a part.

The doctrine of stare decisis, in addition to whatever it may enjoin upon the
intellect, certainly evokes an atmosphere and a mood to abide by ancient
decisions, to follow the old ways, and conform to existing precedents. It
suggests a condition of rest, even of stasis, a system of law whose content is
more or less settled, the past content by past decisions, and the present and
future content because they too are controlled by those past decisions. It
implies the stability of the legal system along the stream of time, that
despite all the vast, social, economic and technological changes of the last

66
eight or nine hundred years, society remains nevertheless in some
meaningful sense under the governance of the same system of law.

Nor is the drama of these questions exhausted even then. For with this same
inner mystery of the common law there are probably also entangled some
subsidiary mysteries of the rule of law" as his notion has arisen in the
common law world, and offers itself elsewhere. As a political concept
"the rule of law"..one main strand. The minimisation if not the
exclusion of human arbitrariness from the processes of law and government.
And if we are to take seriously the atmosphere and mood which surround the
notion of stare decisis, if past decisions yielded precepts of ready-to-be-
known content, if present and future decisions were already implicit in past
ones, then indeed human arbitrariness would at minimum. The assumed
emergence of new decisions from those of the past would depend only on
correct judicial reasoning and not on judicial choice and will. And the notion
of stare decisis would thus run. into the notion of "the rule of law", as in
Bracton's famous subjection of the King not to man but to God and the law. If
we could wholly accept the idea that present and future decisions are
determinable and determined on the basis of stare decisis then indeed we
would finally have attained, the-dream of being under a government of laws
and not of men.

II. THE Ratio Decidendi AS THE LINK BETWEEN GENERATIONS

In a system of law which lives by stare decisis the precise identification and
delimitation of the decisum is the deepest secret of juristic life. Whatever the
other meanings of the ratio decidendi of a case they must include whatever
is meant by that identified and delimited decisum to which stare decisis
requires us to adhere. But its historical meaning is no less vivid:In the stream
of time in which the common law is assumed to unfold from its own
preexisting resources to govern a changeful society, the ratio decidendi

67
would be the indispensable organic link between generations both of men
and of emerging legal precepts. It would be this ratio which, as it were,
legitimizes new precepts as being indeed the offspring of those patriarchal
fundamental principles of the common law which unify it by their pristine
origins.

If stare decisis seems to import a mood of resting on the old ways, of

stability and even stasis in the legal materials, then history compels us to
observe that this apparent mood overlays a process of constant and often
dynamic change. And if such contradictions are to be understood, it must be
in the nature of the ratio decidendi that we must seek some main clues. For
it is the use of this notion through which new decisions can be made in the
comfort and respectability of a proper social relation, and in a manner
legitimising the fruits of decision. Here, if anywhere, is the operating concept
allowing courts which base themselves on stare decisis to do their day-To-day
job of deciding new cases sensibly, even while purporting to adhere to the
older rules.

No one, therefore, need apologise for adding an article on this subject to

those of Professors Goodhart and Montrose, and Mr. Simpson 24 And, by the
same token, the subject is far too grave and momentous to justify neglect of
such developments of thought in this area as the last two or three decades
have produced. It is naturally gratifying that each of the contributors has felt
it necessary to argue that, on some point or other this writer's position as to
the ratio decidendi supported, or was not inconsistent with his own. This
present article however is not designed to defend or even explain the
present writer's position. The design is rather to see if there can be found,

24
See recently J .L. Montrose, "ratio decidendi and the House of Issues (1957) 20 M.L.R. 124-130; A.W.B.
Simpson, "The Ratio Decidendi Case" (1957) 20 ibid., 413-415; and under similar titles respectively, J.L. Montrose,
A.W.B. Simpson, and A.L. Goodhart. in (1957) 20 M.L.R. 587-595. (1958) 21 M.L.R. 155160, (1959) 22 M.L.R.
117-124. See further, Simpson .; . (1959) 22 M.L.R. 453-457.

68
from the present vantage point of debate,any basic distinctions to help in the
more fruitful exploration of this holy of holies of the world of stare decisis. It
will be all the better if any such distinction helps to resolve some of the
cross-purposes figuring in the debate hitherto; but that, in the present
design, would be but collateral to the main purpose.

III. THE TERM Ratio Decidendi

DISTINCTION BETWEEN DESCPRITIVE AND PRESCRIPTIVE

SENSES

Should we not, in the first place, try scrupulously to respect the distinction
between that use of the term ratio decidendi which describes the process of
reasoning by which decision was reached (the "descriptive" ratio decidendi],
and that which identifies and delimits the reasoning

which a later court is bound to follow (the "prescriptive" or "binding" ratio

decidend)

Descriptively the phrase imports merely an explanation of the court's

reasoning to its conclusion, based on sociological, historical and even
psychological inquiry. The finding from such an inquiry is true or untrue as a
matter of fact; it could not be refuted merely by showing that logically the
same decision could have been reached by different reasoning or by showing
that as a matter of law the actual reasoning was fallacious, unpersuasive or
even downright improper and impermissible. This descriptive ratio decidendi
may, of course, itself be sought at various levels; it may for .instance be
limited to the level of verbal behaviour of the judge or it may seek to

69
embrace the level of his total behaviour. 25 Prescriptively used, on the other
hand, the phrase ratio decidendi refers to a normative judgment requring us
to choose a particular ratio decidendi as legally required to be drawn from
the prior case, that is, as the binding ratio decidendi.

The relation between the ambits of the descriptive and prescriptive rationes
is normally at least one of overlapping. The degree of overlapping. and how
near it may approach coincidence, depend, inter alia, on which of the
competing methods of discovering the prescriptive ratio decidend is
assumed to be correct.26 The range of the prescriptive ratio decidendi in
particular, does not of necessarily fall within that of the descriptive. For
instance, in that version of the prescriptive ratio which stresses the
proposition of law enunciated by the court as a basis of its holding. the
prescriptive ratio decidendi would necessarily coincide with or at least be
included within, the descriptive.27 On the other hand, in a version (such as
Professor Goodhart's) which rests on the relation between the "material
facts" and the holding, and for which the court's enunciated propositions of
law are relevant only insofar as they imply a view of what facts are
"material," the position is different. In so far as the later court, looking at the
whole report of the precedent case, may select as "material" (in the
precedent court's view) facts different from those which could be inferred to

25
To avoid further complicating issues already too complex, and in order to give Professor Goodharts theory
its most favourable ground, I have consciously limited the later remarks here on the descriptive ratio
decidendi to the former level, to motives of decision express or implicit through verbal behaviour, as
distinct from the actual psychological motivation leading the court to decision. Cases may, of course, occur
in which the reasons express or implicit in the court's judgment do not correspond with the actual
motivations. Many American realists in their time proposed not only that description should normally
proceed at the deeper level, but that increased knowledge of this level was so important and neglected that
all efforts should be concentrated on it, and the search for the prescriptive ratio decidendi
if..abandoned, or at least suspended.

26
And of course, on the level of description which is being attempted. See dupra, n.2

27
This would be subject to only apparent qualification, for instance insofar as the legal proposition enunciated is
wider than necessary to base the holding on the instant facts.

70
be so from that court's enunciated propositions of law, the prescriptive ratio
might turn out to differ from the descriptive.

The present distinction between descriptive and prescriptive rationes may

clarify the difference between Professor Goodhart, 28 Mr. Simpson,29 and
Professor Montrose,30 as to whether it can be useful or proper to use the term
"ratio decidendi' 'to refer to the original court's actual reasoning in reaching
its holding, without reference to the question whether that that reasoning is
in a later case. The present answer to this would be that no harm can come
of this, provided that we are careful to indicate by some such adjective as
"descriptive" or "actual, that one is not intending by the use of the phrase to
say anything about the binding force of the reasons. A fuller analysis would
then require us to add that this descriptive" or "actual" ratio is, on one
version of the prescriptive ratio decidendi, deemed to be binding insofar as it
is a basis of the actual decision. ( Beyond that it remains (also in that
version) merely descriptive, or in common parlance obiter.)

IV. APPROACHES TO THE OPERATION OF THE SYSTEM OF

Stare Decis

Related to the distinction between the descriptive ratio decidendi and

prescriptive ratio decidendi, are two approaches to the behavior of courts as
this bears on, the problem of the ratio decidendi. One approach is that of the
observer who seeks to describe and explain as a matter of fact how present
decisions are related to prior decisions. The other approach seeks to
establish from the behaviour of courts themselves, perhaps supplemented by
assumed first principles, the limits within which, as a matter of law, a prior
28
A.L. Goodhart, "The Ratio Decidendi of a Case" (1959) 22 M.L.R .. at 121-122.
29
A.W.B. Simpson, same title (1958) 21 M.L.R. 155-156.
30
J.L. Montrose, same title (1957) 20 M.L.R. 587-S88.

71
decision prescribes a binding rule for later decisions. It seeks (to use
Professor Goodhart's term) to establish a "system" by which we can test
what ground of decision of an earlier case is legally binding on the court in a
later case.

That the present writer's account of the working of precedent has been
directed essentially to description and explanation is obvious. It is quite
explicit from the beginning to the end of the relevant chapter. At the
beginning it was asked:

"What are the features of our system of precedent which can give an
appearance of stability and continuity and nevertheless permit
constant change to take place, new propositions to be established, old
one discarded in whole or in part, and permit all this to proceed
seemingly on the basis of logical deduction from pre-existing premises.
31

And, at the end of the chapter, it was said that the "main purpose" had been:

"to display the devices and techniques whereby English judges can live
and work by the creative light of (what Holmes had called) good sense
(as opposed to logic), even while they render homage to the
authoritative premise and the syllogistic deduction. It was to display
how they are able to promote legal flux under the very banner and in.
the very stronghold of stare decisis; how, in Holmes words, 'knowing
too much to sacrifice good sense to the syllogism,' they are able to
present the growth of the law as 'logical in form', even while they make
the creative choice before which logic stops short. 32

31
J. Stone, The Province of Function of Law (1946). 168.
32
Ibid., at 206.

72
Which of these attitudes is adopted by a particular inquiry is generally' a
matter of taste, or direction of intellectual interest. But it may also involve
much more than that. To engage for example on an inquiry concerning the
method, or even the best method, of discovering from the report of a single
case what is 'The ratio decidendi' of that case, may also be an intellectually
impermissible activity, unless at least two assumptions can be made. One of
these is that there is normally ONE ratio decidendi. AND ONE ONLY, which
explains the holding on the facts, and is as such binding. The other is that
such a ratio decidendi, assumed to exist, can be delimited from examination
of the particular case itself. Professor Goodhart's paper of 1931 (originally
published 1930), 4033 both by its general thesis and by its detailed argument,
indulges both of these assumptions. It is, indeed, a model of their
indulgence.

V. ACCEPABILITY OF THE UNDERLYING ASSUMPTIONS OF

PROFESSOR GOODHART'S VIEW

It is believed that the assumption just stated will not bear examination, and
the reasons for this belief may here be expanded as follower.

If the ratio of a case is deemed to turn on the facts in relation to the holding,
and nine facts (a)-(j) are to be found in the report; there may (so far as
logical possibilities are concerned) be as many rival rationes decidendi as
there are possible combinations of distinguishable facts in it . What is more,
each of these "facts" is usually itself capable of being stated at various levels
of generality, all of which embrance "the fact" in question in the precedent
decision, but each of which may yield a different result the different fact-
situation of a later case. The range of facts" of Donoghue v. Stevenson,
33
In (1930) 40 Yale L.J.161-183

73
standing alone, might be oversimplified into a list somewhat as follows, each
fact being itself stated at alternative levels.
(a) Fact as to the Agent of Harm. Dead snails, or any snails, or any
noxious physical foreign body, or any noxious foreign element,
physical or not, or any noxious element.
(b) Fact as to Vehicle of Harm An opaque bottle of ginger beer, or an
opaque bottle of beverage, or any bottle of beverage, or any
container of commodities for human consumption, or any
containers of any chattels for human use, or any chattel
whatsoever, or anything (including land or buildings).
(c) Fact as to Defendant's Identity. A manufacturer of goods
nationally distributed through dispersed retailers, or any
manufacturer, or any person working on the object, or anyone
dealing with the object.

(d) Fact as to Potential danger from Vehicle of Harm, Object likely to

become dangerous by negligence, or, whether or not so.

(e) Fact as to Injury to Plaintif. Physical personal injury, or nervous

or physical personal injury or any injury.

(f) Fact as to Plaintifs identity. A Scots widow, or a Scotwoman or a

woman or any adult or any human being, or any legal person.

(g)Fact as to Plaintifs Relation to Vehicle of Harm. Dance of purchaser,

from retailer who bought indirectly from the defendant, or the
purchaser from such retailer, or the purchaser from anyone or any
person related to such purchaser or other person, or any person into
whose hands it comes at all.

(h) Facts as to Discoverability of agent of Harm. The noxious element

being not discoverable by inspection of any intermediate party, or

74
 not so discoverable without destroying the saleability of the
commodity, or not so discoverable by any such party who had a
duty to inspect, or not so discoverable by any such party who could
reasonably be expected by the defendant to inspect, or not
discoverable by any such party who could reasonably be expected
by the court or a jury to inspect.

(i) Fact as to Time of Litigation. The facts complained of were litigated

in 1932, or any time before 1932, or after, or at any time.

Let us first consider the question of materiality apart from any view on
that matter explicity or implicity manifest in the precedent court`s
opinion. As to none of these facts (a)-(i). and as to none of the several
alternative levels of statement of each of them, could it be said on the basis
of the report of Donoghue v. Stevenson alone that it was on its face not
material (in the logical sense) to the holding in that case. Even as to the
time of litigation, as to which we are most tempted to say that this at least
must be immaterial on the face of it, we must be careful to avoid a petition
principia. Are we really prepared to assert with dogmatism that Donoghue v.
Stevenson should have been, and would in fact have been, so decided in
1800? If not, it follow that logically i.e. apart from any special indication that
should be drawn from the precedent courts own attitude, the ratioof
Donoghue v. Stevenson did not compel courts to impose liability in a case
where only some of the above possible material facts, and some levels of
statement of them, were found. And another way of saying this is that (apart
still from such special indication) a ration decidendi drawn from a case by the
material facts method can only be prescriptive or binding for a later case
whose facts are on all fours in every respect. And since the italicized words
must be taken seriously, this reduces the range of binding ratio decidendi to
vanishing point. Outside this range, the question always is whether in the
later courts view the presence in the instant case of some of the facts (a)

75
(i), at some of their alternative levels or generalized statement, is more
relevant to its present decision, than is the absence of the rest of them. And
this is not a question of the materiality of facts to the decision in the
precedent case imposing itself on the later court. It is rather a question of
the analogical relevance of the prior holding to the latter case, requiring the
later court to choose between possibilities presented by the precedent
case.34

At this point then, before we begin searching for the precedent courts
assertion as to which facts and levels of statement of them are material it
is correct to say that the questions: What single principle does a particular
case establish? What is the ration decidendi of this case as at the time its
decision? It can only be answered by saying that there is no such single
principle or ratio that can in terms of the material facts test be binding in a
later case.

Does it then overcome this difficulty to define "materiality" as Professor

Goodhart in effect does in term of the precedent courts explicit or implicit
assertion as to which of facts (a)-(i) are material? Or to insist that the
question, What are "material facts" by which we determine the prescriptive
ratio of a case? is always to be determined according to the view of the
precedent court or observer (indeed, in defending his position in 1959 35 this
distinction becomes almost its central bastion.) Yet there will often be the
gravest doubt as to what facts the precedent court "explicitly or implicitly"
"determined" to be material. There 'Will often be inconsistent indications
from what is expressed or implicit, even in a one judge court. Such
inconsistencies as between the concurring judgments in appellate courts are
notoriously also a constant and fruitful source of legal uncertainty and

34
And see infra, pp. 617, 618,
35
(1959) 22 M.L.R. at 123,

76
change. The more important the issue and the instance of appeal the more
likely are there to be multiple judgments and therefore multiple versions of
the ratio decidendi and this by any test. And there are other chronic sources
of competing versions and indeterminacies later to be mentioned.

Professor Goodhart recognizes some of these difficulties in distinguishing

which of facts (a)-(i) are "material," and in particular that this would involve
some guesswork on the part of later courts in applying his system. In his
latest exposition he urges that they nevertheless do not affect his "system"
since they are due to the subject-matter itself, and not to the system which

is applied to it36 On the most favourable understanding of this, it appears to

mean that difficulties spring from deficiencies in articulation of the precedent

court or in the report, or other characteristics which are of a more or less
"accidental" nature. Even to this it would have to be said that the "accident-
proneness" in the subject matter makes the difficulties serious and constant.

Yet these are not the most crucial difficulties with Professor Goodharts
system. The crucial ones arise rather from the several alterative levels of
statement of each "material fact" of the precedent case, I1m.ging from the
full unique concreteness of that actual case, through a series of widening
generalization. In this series only the unique concreteness is firmly anchored
to the precedent court's view that a given Fact A is "material"; and ex
hypothesis that level of unique concreteness can scarcely figure as a part of
the binding ratio for other cases. By the same taken the reach of the ratio,
even after each "material fact" seen by the original court is identified, will
vary with the level of generalization at which "the fact" is stated. How then is
the "correct" level of statement of Fact A to be ascertained by the later
court?

36
Ibid at 124

77
Is this question too to be referred back entirely to the "explicit" or "implicit"
view of the precedent court, as to Which is the "material" level of statement
of each "material" fact? Are we to say that merely because the House in
Donoghue v. Stevenson might have stated the material fact as to the agent
and vehicle of harm in terms of bottles of beverage, this conc1udes one way
or another a later case as to cartons of butter, or the wheels of automobiles?
Is it reasonable to assume that courts using language appropriate to the case
before them do, or could, address themselves in their choice of language to
all the levels of generality at which each "material" fact (a)-(i) of the concrete
case is capable of statement, not to speak of the possible combinations and
variations of these facts, and the implications of all these for as yet
unforeseen future cases? Yet unless it is reasonable so to say it would reduce
judgment in later cases to a kind of lottery (turning on the chance of words
used) to say that the later holding is controlled by that level of generalized
statement of the assumed "material fact" which is explicit in the precedent
court's judgment. And to admit also that level which might be "implicit" in
the former judgment would in most cases be merely to impute to the
precedent court a choice of levels of generalised statement (and therefore of
the reach of the ratio in the instant case) which must in reality be made by
the instant later court.

If on the other hand, Professor Goodhart's reference of the question of

material back to the precedent court does not extend to the question. Which
level of generalised statement of the "material fact" is determinative of the
ratio? the impasse of his system would become, if possible, even clearer,
because more patent. Each "material fact" of a case would then have to be
recognized as capable of statement in an often numerous range of more or
less generalised versions, the range of the ratio varying with each version.
Since this is to the extraction of the ratio decidendi in the course of later
judgment could never have the flavour of discovering the single correct ratio
decident of the earlier case, by merely identifying nuno fro tunic the "facts"

78
deemed "material" 'by the precedent court as at the instant of the precedent
decision. And this is quite additional to 'the difficulties, already mentioned, of
so identifying these "material facts."

We here approach the very core of the difference between Professor

Goodhart and the present writer concerning "the ratio decidendi of a case."
However it be as to the interesting ancillary points of debate between
Professor Montrose and Mr. Simpson on matters collateral to this writer's
position, both of them are agreed (and, it is believed, correctly) on two
matter37. One is that Professor Goodharts System of discovering the ratio
decidend neither describes adequately the actual process by which case law
is built up, nor can E be the answer to the question, How do we discover "the
ratio decidendi of a single case"? They are also agreed, and correct in
believing that this writer shares their conclusions on these two matters. If
there has been doubt on this it is hoped that the present restatement
supplement will dispel it, For this restatement is treatment is intended to
spell out and supplement the main gist of the treatment in The province and
Function of Law. This is, there is not (despite Professor Goodharts theory) a
anyone ratio decidendi which is necessary to explain a particular decision,
and is discoverable from that decision.

VI PROFESSOR GOODHARTS RECENT FORMULATION

For, once it is granted that a material fact of the precedent case can be
stated at various levels of generality, each of which is correct for that case
any of these levels of statement is potentially a material fact Insofar as the
ratio decidendi is determine by each material fact then what the
precedent case yields must be a number of potentially binding rationes
competing inter se to govern future cases of which the facts may fall within
37
See esp. P.W.P. Simpson op.cit. (1958) 21 M. many if not appellate in (1957) 20 M.L.R. 587, 593-594

79
one level of generality, but not within another An automobile in bad repair
can be a noxious physical object, but no can call it an opaque bottle
containing a reputed snail.

That the above submissions are correct can ("With respect) also be inferred
from Professor Goodhart's latest statement on the matter. He expresses
himself, at the very end of his recent article, called complete agreement with
the present writer's view that "Explain decisions are frequently required"
before the scope of' the decisions, decidendi of a case38 is finally dete
mined.39 The least that this can means is that the scope of the ratio
decidendi of the precedent case will "frequently" not be determined or
determinable until further decisions have been made; and that it will
"frequently" be impossible to draw from "the facts already treated by the
judge as material and his decision based on them" a single

ratio decidend that will serve as a useful basis for later judgment. If this is
so, we must look in a single sense not for the one binding ratio decidendi
but rather for a range of alternative rationes decidendi competing inter se to
govern fact situations and. as' among these. only future decisions will show
which one is binding. All this involves critical admissions, which (it is
ventured to submit) finally contradict Professor Goodhart's steady
assumptions that there must be a single ratio decidendi of a case,
ascertainable from within that case. This self-contradiction can be made fully
to appear by the following steps.

38
He actually writes "the scope of a principle in determinate. If this is relevant at all however at the and
footnote 219. Principle must be read as equivalent to
39
Op. cit. (1959) 22 M.L.R. 124.

80
First, this need for later decisions to plot the limits of the precedent case
arises, in part at least (as just observed), because each "material fact" can
stated at several 1evels of generality. Second, this means as has also been
seen, that the precedent case in itself must yield more than one, and often
many , potentially binding rationes decidendi competing to govern future
cases. Third, a later court which rejects one of these competing potential
rationes decidendi of the preceding case, is thereby determining as at the
time of its own decision, which of these competing rationes is to be
prescriptive for the instant case. Fourth, in terms of Professor Goodhart's
system, what the later court is here doing is choosing between the
competing versions of "the material facts." For (the holding itself in the
precedent case being fixed) variations in the ratio decidendi must be
attributable to variations in the other main component of Professor
Goodhart's system, choose between these competing versions of the "the
material facts." Such choices (he admits) are frequently required to
determine the scope of the prescriptive ratio decidendi. Yet his system
requires him to seek only be precedent courts view of the material facts
and thus by his present admission, Professor Goodhart has in effect
acknowledged that more than on competing view of the material facts will
frequently be available to the later court. It seems to follow that the
assumption on which his system is based, that each case has within itself a
single ration decidendi ascertainable in terms of the precedent courts view
of the the material facts together with its holding, is denied by this very
admission. Sixth, insofar as the multiplicity of possible competing versions of
the material facts seems characteristic of most appellate cases, the
difficulty thus revealed is not, as Professor Goodhart would have us
believe,40 an accident arising from "the subject-matter" of "some
precedents"; it is rather a difficulty and (with respect a fatal difficulty for his
"system" itself.41

40
Ibid
41
Ibid

81
He himself now courageously concedes that his "system" involves its
operator in some "guesswork" and he seeks to soften this by saying that
there is always some "guesswork'" in "legal interpretation", and that "this is
what makes the law) so interesting." But it has to be observed that since the
sources of these uncertainties are (as has now been shown) central and not
merely marginal, to "the subject-matter", the "guesswork" of which he
speaks also becomes rather central in the operation of his "system. 42 And
(as has also been shown) the area of indeterminacy arising from this
guesswork is as wide as the uncertainties affecting identification of each
"material fact," when multiplied by those -affecting the level of statement at
which each "fact" is deemed to be "material".

In all these circumstances it becomes a matter for serious consideration how

much more intellectual energy should be devoted to juristic effort to discover
the "correct" mode of ascertaining "the ratio decidendi of a particular case
by examining the case itself; for ex hypothesis there is no such unique ratio
"It was this reason, and no disrespect for a colleague's views, which led the
present writer to deal only in a footnote with Professor Goodharts own
method and rules for discovering "the ratio decidendi of a case." For insofar
as these proceeded on the above mistaken assumptions, they could be no
more' persuasive (however distinguished and learned their author) than any
other proposal so proceeding; and that is not at all persuasive. And it was
precisely at the point in the text at which these assumptions were
questioned, that his work was footnoted The reference in the note to the fact
that Professor Goodhart could not claim that he was purporting to describe

42
It does not, therefore, represent a possible accommodation between our views for him to admit merely "that some
precedent will always remain indeterminate.' ( (1959) 22 M.L.R. 124) AS a reply to my own conclusion (on the
reasoning now again here developed) that his rules for determining the material facts" would still leave "the ratio
in many, if not most appellate cases, a matter for variable judgment," it does no really. join issue to admit that
some" precedents will always remain indeterminate.

82
"the actual uniform- operation of English courts, was merely ancillary to
the main point in the text.43

This brings us to that learned writers suggestion that this last point would
undermine not only his position but the present 'Writer's also. "Since," he
says, "there is no actual uniform44 operation of English courts concerning the
application of precedents it would seem to follow that all theories o this
point. Including those expressed by Professor Stone, must be invalid." Such
poignancy as this observation might otherwise have had, ceases as soon as
the quoted words are replaced in their context and as the distinction is
recalled between inquires, on the one hand seeking to describe and explain
how present decisions are as a matter of fact related to past decisions, and
those, on the other, which seek the correct method of ascertaining the ratio
decidendi of a case i.e., the one prescriptive or binding ratio. It was the
illusory nature of the latter inquiries, arising from the erroneous assumptions
on which they proceed, which led the present writer to relegate even the
most famous example of them to a footnote. It was the illusory nature of
the latter inquiries arising from the erroneous assumption on which they
proceed, which led the present writer to relegate even the most famous
example of them to a footnote It was with the former, the sociological, type
of inquiries that the present writers own work was concerned. And since
such inquiries do not proceed on the assumptions in question there seems no
reason why they should share this illusory character. It is moreover certainly
not necessary, in trying to describe or explain the phenomena of judicial
precedent, to assumed any degree of uniformity in the relevant judicial
behaviour; here, indeed, is where the lack of uniformity itself may only make
the attempt at description more fascinating and fruitful.

43
50. J. Stone, op.cit. 187-188, esp. 187, text lines 1-15 et seq. and footnote 219.

44
His italics

83
It is more important to stress the distinction between these two kinds of
inquiries, since Professor Goodhart continues to insist, even in 1959, that his
earlier essay provides "a guide to the method which most English courts
follow when attempting to determine the ratio decidendi of a doubtful case."
Here again, still, there seems to be the unquestioning assumption that there
must necessarily be only one correct ratio decidendi45 and one discoverable
within the four corners of the particular case. He is at pains to stress,
indeed, even more than he had done twenty-eight years before, that this
ratio depends on "the material facts as seen" expressly or implicitly, by the
judge or judges in the precedent case, and not on discriminations between
material and other facts made by later courts in fixing the ratio decidendi46
He thus redoubles the dependence of his position on the challenged
assumptions. Professor Goodhart may conceivably be able to show that that
challenge was itself baseless; it would be a great service if he would squarely
address himself to this task.

VII JUDICIAL CHOICE AND THE RATIO OF THE RATIO

It seems appropriate at this point to place the areas within which the
exercise of judicial choice is compelled by the indeterminate nature of the
ratio decidendi, along with other areas of such required judicial choice. Such
stocktaking, as it were, of the bearing of modem juristic thought on. "the rule
of stare decisis," may afford some at least of the answer to Lord Wright's
question how the "perpetual process of change" in the common law (and
above all its movement on appellate levels) is to be reconciled with "the rule
of stare decisis." The main areas of judicial choice listed below, which thus
call for recognition, will quickly be seen to occupy a number of the principal"

45
Ibid., at 118, where he says that even where there are many judgments in an appellate case, "each case must
contain a principle which is binding in future cases." And cf. ibid. 121

46
Ibid., 119, 121, 123.

84
control centre" in the operation of a system of precedent. A brief summation
of each follows.

(a) Choices Unavoidably .Arising from the Nature of Terms Used in

Substantive Rules, or from Interrelations of Rules.

(b) Choices Unavoidably Arising from Competing Methods of

Seeking "the
Ratio Decidendi of a Case."

(c) Choices Unavoidably Arising from the Competing Versions of the

Ratio Decidendi of a Particular Case, when the "Material Facts"
Method is Applied even to a Single Judge Decision.

(d) Additional Choices Arising from t.he Competing Versions of the

Ratio Decidendi of a Particular Case (by any Test) when Several
Judgments are Given.

(e) The Multiplication of Available Choices Arising from the Interplay

of the Above.

A. Choices unavoidably arising from the terms used in substantive rules

and their interrelations: categories of illusory reference

The common law is at least as rich as any other in the use of terms which
leave open for the court a substantial choice as to the result to be reached in
a particular case. Some years ago it was sought to identify and illustrate the
main kinds of categories, whether consisting of supposed distinctions, or of
particular terms used in rules, principles, standards or conceptions which
allow freedom of choice to courts despite seeming to require a particular
result to be reached. One is the category of meaningless reference of which
most examples resolve themselves into the legal distinction without the

85
factual difference. Though the court may Seem to treat such a legal
distinction as determinative of the case, its decision can still obviously not be
determined by it. Another is the category of concealed multiple reference,
where a single verbal term represents a number of different though related
legal notions. each with a different set of legal consequences, and where the
courts, operating under the appearance of a single rule can still exercise
freedom to reach the results they think appropriate by shifting from one
legal notion to the other.

Even more ubiquitous and important, throughout the legal system and its
operation, are the legal categories of competing reference, and the single
category with competing versions of reference. No source of litigation on
matters of law is more central on the appellate level than the availability of,
alternative starting points for logical arguments, both of which converge in
their conclusions on the instant facts, to make available opposite
conclusions. When this occurs, apart from questions of hierarchy of authority
the court is not being free to choose between the alternatives
unembisensical, that is, compulsion; it is obliged to do so. Nor is
unembisensical argument without its importance in a going sycidendi to
drawn the legal category of circuitous reference (as meiest would have still a
the sophistication of lawyers) usually has
Some theories of quasi-contractual recover contract. which have
had their influence ar.it be necessary at this stage to do more than
recall the wide ramification throughout the common law, of categories of
indeterminate reference, such as that of reasonableness or fairness, in
allowing courts to reach variable conclusions in the particular case, within a
wide range of legal possibilities. This type of legal category is particularly
illuminating since its effect is openly to invite the court to inject into the
living body of the older law insights arising from the court's knowledge of
contemporary social relations and the contemporary environment. But the
fact that the invitation is here openly given, should not prevent us from

86
seeing that this injection also takes place within the areas of required
judicial choice which the other types of illusory reference also provide. 47

B. Choice unavoidably arising from competing methods of ascertaining

the supposed ratio decidendi of a case

It may be as Professor Goodhart has again argued so earnestly that his own
purported method for finding the ration decidendi, namely to find the
material facts as seen by the judge and his conclusion based on them, 48 may
often yield different results from other methods (variously described) which
focus on the reasons given for decisions by judges, or on the rule of law
enunciated by the court.49 Indeed, it seems to have been a main point of
his original article,50 as well as of the issue he has currently taken with Mr.
Simpson, that the different tests may well yield different rationes and
therefore opposed results in later cases.

Insofar as this mean point was accepted, 51 we would than be confronted with
the indubitable fact that British courts continue, more than a generation after
the "correct method" was presented to them, to use also more or less
cogently, the other "methods" which are liable to produce other results. It
47
See, for fuller treatment, J. Stone. The Province and Function of Law (1946), c. 7. For an attempt to represent the
logical structure of the fallacies of legal reasoning, discussed in that. chapter, by use of symbolic logic, see I.
Temmelo, "Sketch for a Symbolic Juristic Logic" (1956) 8 journal of Legal Education, 277; at 300-302. See also U.
Klug, Juristische Logik (2nd ed 1958), 144.
48
Ibid., at 119.
49
Ibid., at 118.
50
Repr. In Essays in Jurisprudence and the common Law (1931), 1-26.
51
Mr. Simpson points out that the court s application of the enunciated proposition of law in the instant case
implies a holding as to what are "the material facts," and thus amounts in the end to the same test as Professor
Goohart's. If the latter be taken on its own claims, i.e., as yielding one single ratio from within, the precedent case,
Professor Goodhart might perhaps seem correct in insisting that ''the material facts as he would find them in the
report as a whole, may not be the same as might be drawn from the court's application of the enunciated proposition
of law. This would arise, in the present view because of the different available levels of statement of each
particularly material fact, "'because the notion "fact" itself is a notion of... (See supra, pp. 603-604) Merely because
the precedent ... of law referred to snails in bottles would not prevent a ... on the "material facts" test, from holding
that the not concern snails or bottles as such, but only as ... of noxious agents and vehicles embracing these
versions of each "fact" arising from different ... prevent Professor Goodhart's test from yielding any ... 605-606);
this clarification seems also to boomerang on ... positions, leaving the particular controversy rather ...

87
was indeed precisely the neglect even of may attempt to apply the Professor
Goodhart's "material facts" test by the Court of Appeal of Northern Ireland 52
in relation to the House of Lords case of Geo. Wimpey & Co., Ltd. v. B.O .
A.C53that led Professor Montrose to write the stimulating article which
initiated the present exchange Whatever weight be attached to Professor
Goodharts view that "most English courts follow the method to which he
is seeking to give a guide, it seems clear both that judicial practice does
not consistently do so, and that no rule of law compels them to do so. It
follows that insofar as different methods are thought to be capable of
yielding different rationes, there is here one constantly important source of
judicial choices at the very heart of the notion of stare decisis. And this is
would be additional to the choices which (in the present view) necessarily
and in any case arise from the competing versions of "the material facts" of
any particular case, considered under the next head.

C. Choices unavoidably arising from the competing versions of the ratio

decidendi of a particular case.

Additional to the areas of choice just examined, and even more important ,
are those which rise for any court which may seriously attempt to rely wholly
on Professor Goodharts test of the material facts as seen the judge & his
conclusion based on them, in seeking the ratio decidendi of a previous case.
It but rarely if ever occurs that the previous explicitly stated: "Out of the
facts (a}-(j) appearing in this case the material facts as I see them solely
basing my conclusion are A. B and C." Yet unless it does this (at least in
effect) there is no logically valid method whereby a later court, looking only
at that single case, can decide with certainty that the facts A, B and C are
"material," while facts D-J are not. For, hI mere gic (as has been seen) it is
possible to draw as many general propositions from a given decision as there
52
In Walsh v. Curry [1955] N.I. 112.

53
.(1955) A.C 169

88
are possible combinations of distinguishable facts in it. But merely looking at
the fact it is impossible logically to say which are to be taken as the basis for
the ratio decidendi. The question - "What single principle does a pat
particular case establish? has for these reasons been said (and correctly so)
to be "strictly nonsensical, that is, inherently incapable of being answered54

Moreover, as has also' been seen, the ratio decidendi to be drawn by the ...
on this "material facts" test would have still a greater number of competing
versions, by virtue of the truth that each "fact" itself can be stated at
different levels of generality, ranging from a supposed "snail in an opaque
bottle to "a noxious agent." The guesswork component involved in most
cases in separating out the "material" from the other facts, would be vastly
compounded by further guesswork concerning each of the facts guessed to
be "material." I mean by "further guesswork, guesswork as to the level of
generality at which each of these facts was "material. "For many such levels
of statement will equally embrace the fact appearing in the report; but the
breadth of the ratio decidendi. would have to be dependent on the level of
generality of meaning which the later court thinks the precedent court
"explicitly or implicitly" had its eye on.55

D. Choices unavoidably arising from multiplicity of judgments in many

appellate cases
The articles of Professors Paton and Sawer56 and more recently of Professor
Montrose,57 have well stressed the problematical impact of the role of
concurring or dissenting judgments on any simple theory of how to discover
"the ratio decidendi of a case. It may still be important to bring out again
the fuller context of these important contributions. The duties of later judicial

54
Cf. The Province and function of Law (1946), 187. Vol. 22
55
. See supra, pp. 603 ET seg, for fuller demonstration of these positions.
56
G. W. Paton and G. Sawer, Ration Decidend and Obiter Dictum (1947) 63 L.Q.R. 461.
57
J.L. Montrose, ""Ratio Decidendi and the House of Lords (1957) 20 M.L.R 124.

89
choice here rising are a special and most important area of the operation of
the single legal category (the assumed ratio decidendi of the case") with
several, and possibly numerous, competing versions, none of them
authoritative, all of them more or less persuasive.

What is so important to observe is that the ratio with the several competing
versions, far from being marginal in the system of stare decisis, is one of its
main products. The structure and modus operandi of our courts, especially at
the appellate level where points of law which are under stress come to be
reviewed, seem to be geared so as to increase the range of competing
versions available in rough proportion to the importance of the point of law.
The large discretion left to a single judge for discussion of his reasons, and
for obiter dicta, the separate opinions habitually given by the members of
appellate courts and of the House of Lords, whether concurring or dissenting,
may all be productive of numerous versions of the legal category under
examination. Even where all the decisions concur for the instant facts, the
differing versions are liable to be brought into bitter competition by the
slightly different state of facts of a future case. It is essentially from this
feature of House of Lords decisions that there derives its wide freedom of
action, despite the rule that it is bound by its prior decisions. For since no
sanctity attaches to one set of concurring reasons as against another, one
may be preferred to another, or even used merely to neutralise it, leaving
the field clear. This technique of distinguishing is often regarded as in the
nature of an evasion of the system of precedent. It is respectfully submitted
that on the contrary, it affords a deep insight into its essential nature.
"Competing versions" of a legal category are a normal feature of the
authoritative materials; and wherever they exist, a set of facts will sooner or
later arise which stands between the competing versions, and can only be
dealt with by a fresh creative decision. The system of separate speeches
merely sets this aspect into relief.58
58
Cf. The province and Function of Law (1946), 179-181.

90
 E. The vast further multiplication of available choices arising
from the interplay of the above

Each area of required judicial choice arising in the above several ways
imports room for action of a later court uncoerced by a supposed single ratio
decidendi of the earlier case. Each such area may later present itself in a
particular case. And while all of them may not necessarily be present in
every important appellate case, more than one of them may be, and indeed,
often are present together. When this occurs the effect of the interaction of
the two areas will be to increase the area of judicial choice, not merely in
arithmetical but in geometrical proportions, by dint of the range of
combinations and variations of the series of choices available each area.

The duty of choice in the interpretation of a precedent containing in its

language a "category of illusory reference" (as above described) will be
further her expanded if later courts resort to competing versions of the
method of determining its ratio. And even if later courts all choose one
method of determining its ratio, the choices might still be greatly expanded
because the later courts, despite their similarity of method, still reach (as we
have seen they may) competing versions of the ratio decidendi of that
particular precedent. And, of course, there will often be superadded to such
situations, especially where the precedent is a leading case decided at a high
appellate level, the range of choices and of further combinations, and
variations of them, arising from varied rules "enunciated," or "material facts"
explicitly or implicitly found, as a basis of the respective decisions in a
multiplicity of appellate judgments in the single case.

91
VIII. DUTY OF JUDICIAL CHOICE-MAKING AS INHERENT IN THE RULE
OF Stare Decisis
This article has emphasised the choices usually available at the appellate
level as a steady normal product, rather than a rare and abnormal one, of
the operation of the rule of stare decisis. It is necessary, in closing, also to
stress that to assert the availability of judicial choices is not the same as to
assert judicial arbitrariness in decision, or even judicial "legislative power" in
the sense in which we attribute this to the legislature. The effect of the
exercise of the judicial duty to choose is, of course, to produce new law and
control and guide its growth; in this sense it may be called "creative" or even
"legislative." But unlike that of the parliamentary legislator, the judicial
choice is usually between alternative decisions and modes of reaching them
presented to the judge by the authoritative materials 'of the law. These
materials do, of course, include areas of settled rules which it would require
parliamentary action to overcome. But they also present (especially at the
appellate level) guide posts to alternative solutions which remain legally
open, beyond the settled areas. In these senses the required judicial choice-
making here under discussion, creative as it is, is still (in Cardozo's famous
phrases) confined from molar to molecular motions, and is "interstitial" in
character.

Yet we must be careful not to assume from such metaphors that the area of
movement is unimportant, or (still less) that its size is somehow always
diminishing by the accumulation of past decisions. For the universe of
problems raised for judicial choices at the growing points of law is an
expanding universe. The area brought under control by the accumulation or
past judicial choices is, of course, large; but that does not prevent the area
newly presented for still further choices by the changing social, economic

92
and technological conditions from being also considered. And it has always to
be remembered that many occasions for choice arise by the mere fact that
no generation looks out on the world quite from the same vantage point as
its predecessor, nor for that matter with the same eyes. A different vantage
point, and different eyes, often reveal the need for choice-making where
formerly no alternative, and perhaps not even any problem, were perceived
at all. The massiveness of the areas for judicial choice at a particular time, in
other words, is, a function not only of the accumulation of past decisions, not
only of changes in the environment, but also of new insights and
perspectives both on old problems, and on the new problems thrown up by
these changes or otherwise entering the cultural and spiritual heritage. And
one essential point is that, whatever the area, the rule of stare decisis not
only imposes on judges these constant duties of choice, but also requires
them in choosing to give scrupulous heed to the alternative paths presented
by the authoritative legal materials, including especially past decisions.
Another is that the present thesis does not assert that judges ought to
assume, in defiance of the rule of stare decisis, any new right to make
choices. It is rather that in many areas the only authoritative guides consist,
even as things are, only of a series of alternatives among which, by the
system of stare decisis itself, they have in a case an inescapable duty to
choose.

It is precisely in the above sense that the rule of stare decisis has played and
will continue to play a great role in common law judicial achievement.
Precedents present, for the instant case, a rapid review of social contexts by
other minds after careful inqury. They also point to the available paths of
reasoning by which one result or another can be, or has been reached.
Moreover, it remains consistent with the present view that even appellate
courts do infact follow precedents do draw rationes decidendi from cases
and decide subsequent cases in accordance with these. They even do so,
often enough, by characterizing some facts ( at some level of generally of

93
statement) in the prior case as the material or important ones, and others
as not such. What has been here urged is that both in logic and in law other
alternative rationes based on alternative characterizations were also usually
available for then shifts to the elements of choices are made when they do
present themselves. Here, it is believed, is the heart of the secret by which
Lord Wright`s paradox is eased, by which the rule of stare decisis stands
together with a perpetual process of change.

Cardozo, Holmes, Wright and others have described aspects of the judicial
choice-making as seen and felt by the judge, and a great but scattered and
controversial literature has attempted such description from the outside:.
The elements of judgment involved are unlikely ever to receive adequate
description, even in an age in which "decision-making" in general has
become a fashionable focus of social inquiry. The framework of judicial
choices within the matrix of the "rule of stare decisis." in any case, sets
judicial decision-making somewhat apart. While it is no part of the present
purpose to attempt any general description, one or two more limited
observations may here be added.

Perhaps the two commonest ways of referring to the development of the

common law have been in terms of (1) a process of trial and error by which
the limits of a rule are progressively defined: or (2) the search among the
authorities for the "closest" or "the right" analogy. In both these ways of
speaking when we think them through, certain essential insights are well
embedded. If we think of the plotting of the limits of a rule by trial and error,
there is involved at each point the later court's assessment of the relevance
of the former problem to the instant one, and the wisdom of incurring the
logical and social consequences of the former decision in connection with its
present duty of choice. And which alternative is chosen from the versions of
the material facts (or of the ratio of the precedent case) made or left
available by the authoritative materials, will reflect the assessments thus

94
made. If we think in terms of the use of analogy then, again, there are
involved judgments as to the "similarity" of the problem presented by the
precedent case to that in the instant one, and as to the version of the ratio
of the precedent case by use of which (in terms both of logical and social
consequences) that similar problem will receive a "similar" solution in the
instant case. In either way of speaking, it is impossible to confine the
ingredients of judgment either to the logical relations between legal
propositions, whether actual or potential, and whether framed in terms of
material facts or of choice or compared to another, or to judicial views of
public policy ethics, justice, expediency or other standard of what is
deemed desirable. And by the same token, we also cannot exclude a limine
the operation of any of these groups of considerations as an ingredient
actually and properly to be entertained.

In short a "rule" or "principle" as it emerges from a precedent case is subject

in its further elaboration to continual review, in the light of analogies and
differences, not merely in the logical relations between legal concepts and
propositions; not merely in the relations between fact situations, and the
problems springing from these; but also in the light of the import of these
analogies and differences for what is thought by the later court to yield' a
tolerably acceptable result in terms, of "policy,'" "ethics,"
'justice.""expediency" or whatever other norm of desirability the law may be
thought to subserve. No ineluctable logic, but a composite of the logical
relations seen between legal propositions, of observation of facts and
consequences. and of value-judgments about the acceptability of these
consequences, is what finally comes to bear upon the alternatives with which
"the rule of stare decisis" confronts the courts and especially appellate
courts. And this, it may be supposed, is why finally we cannot assess the
product of their work in terms of any less complex quality than that of
wisdom.

95
Among recent statements which express something of the nuances and
delicacies of balance involved, is that of Dean Erwin N. Griswold:

There is in nearly every case an area of choice. How a judge marks out and
determines that area largely determines, the type of judge he is. In this area,
most matters are ones of degree, ones of more or less. They are not black
and white.

If a judge keeps this area too small, he is likely to be a poor judge, for he will
be too hidebound by precedent, too much tied to the past, too unaware of
the relevance of variations in the situation before him.

On the other hand, if a judge allows this area to be too broad, he is not likely
to be a good judge. He may run some risk of deciding according to his own
personal choice rather than according to law as he is given light to
understand the law; he may give too little weight to precedent, and make the
unsettled.

Most judges successfully avoid these extremes. Even then, there is an area
choice. That is what judges are for. Within this area, it may not be possible to
give a purely logical demonstration that one result is better than another. A
judge has to call on all the resources of his experience and wisdom in coming
to a conclusion. Some judges hew rather closely to the line: some are more
free- wheeling. 59

59
Erwin N . Griswold, Earl Warren and the Supreme Court," The Christian Science Monitor, December
23,1958. While the context of the quotation concerns the Supreme Court of the United States , Dean
Griswold has informed me that it1represents accurately his view of the role of choice throughout judicial'
activity.

96
When, therefore, Lord Wright says that judging is an act of will," and that
"notwithstanding all the apparatus of authority, the judge has nearly always
some degree of choice." this is but the negative side of the answer to the
question how the "perpetual process of change" in the common law can be
reconciled with the rule of stare decisis." The rest of the answer lies in the
wisdom of the exercise of the duty of judicial choice down through the
generations. It flows from recognition that our law constantly produces and
reproduces new areas for choice-making not only by frequent resort to what I
have called "categories of illusory reference" of substantive law, but (above
all) by maintaining at the centre of "the rule of stare dedcisis" a notion of Lire
ratio decidendi of a case which is almost a perfect medium for the creation of
multiple and competing references while, thus leaving room for the play of
contemporary insight and wisdom, however, the notion also directs the
attention of the later court to the contexts of earlier cases, and to the views
of logical consistency, experience and values displayed by judges in the
earlier contexts. It thus tends to ensure that what official experience
therewith relevant to the situation is taken into account.

If we to recognize in this wider sense the truth of Holmes view that "behind
the logical form lies a judgment as to the relative worth and importance of
competing ... grounds often an inarticulate and uconscious judgment," the
question may properly be raised how far judgment is likely to become wiser
by dint of bringing its grounds to judicia1consciousness and articulation. That
is a large and hazardous question on which perhaps the passage of years
may lead this writer to qualify such confidence as he seemed to express in
1946. Yet the answer to that question can not affect the duty of all of us,
especially in free societies, to cherish the processes by which we are held
together; and the duty to understand is not the least important corollary of
the duty to cherish.. If we must continue to think of stare decisis as
sanctifying still any particular principles of the common law, then let us
also see the deep relevance of Ehrlichs truth that apparently stable

97
principles, can become so general by the uninterrupted process of
extension and enrichment of their content ... that they are adaptable to the
most diverse situations In actual fact (the norm) is not the same norm at
all; it has remained unchanged in appearance only; it has received and
entirely new inner content." Even thus, perhaps it is, that the "rule of stare
decisis." maintains its sway over the common law, by compelling a self
perpetuating self-renewal of what the common law contains.

98
 LECTURE FIVE

GUIDE TO UNDERSTANDING OF CASES ON NEGLIGENCE

I: WINTER BOTTOM v. WRIGHT

1. Was there a contract between the plaintiff and defendant What

contracts were there and who were the parties to each contract?
2. Was the claim made in contract or tort?
3. Did the court say the defendant owed a duty to the plaintiff To anyone?
4. Why was the court not prepared to extend the liability of defendant to
cover loss sustained by the plaintiff in the circumstances?
5. Do you think the Court adequately disposed of Peacock's arguments?
6. What other important points were raised?

II: FREDERICK LONGMEID v. HOLIDAY

1. Why was the husband a plaintiff?

2. Was there any contract between the female plaintiff and the
Defendant?
3. Was there any fraud by the defendant?
4. On what basis was this case distinguished from the other referred to in
which liability arose independently of contract or fraud? why did the
courts impose liability in these other cases?
5. Why was this not a dangerous object?

III: GEORGE v. SKIVINGTON

1. Who were the plaintiffs in this case?
2, Who were the parties to the contract?

99
3. Could a female "plaintiff' in 1869:
(a) enter into a contract on her own behalf?
(b) sue in her own name?
See The Married Women's Property Act, 1882 (England) 45 & 46 vict c.
75.
4. What damage did the male plaintiff suffer?
Why was he plaintiff?
5. Did the chemist intend to mislead anyone or harm anyone with his
product?
6. Why is it important that the chemist knew the identity of the ultimate
consumer?

7. Are there reasons advanced by the three judges in support of their

decision in favour of the plaintiffs the same?
8. Was the defendant liable in his capacity as manufacturer or seller or
was liability defendant on him being both manufacturer and seller?
9. How would plaintiffs have proved the defendant was negligent?

IV: HEAVEN v. PENDER

1. Did the defendant know who was going to use the staging?
2. Was the element of fraud stressed here?
3. What was the decision in this case?
Was it that laid down by Brett M.R.?
4. What was the ratio decidendi of this case?
5. What differences in reasoning of the judges in this case do you
percive?
6. What remarks of Cotton L.J. would you consider to be obiter dicta?

EVOLUTION AFTER DONOGHUE v. STEVENSON

Limiting Donoghue v. Stevenson: The Concept of "Intermediate
exanimation" or Intermediate Inspection:-

100
 I: GRANT v. Australia Knitting Mills Ltd

1. What does Lord Wright means by "proximity"?

2. Must the defect in the article be "latent"?
3. What is the logical argument for extending the liability from an
article of drink to clothing?
4. What did the plaintiff have to prove to establish negligence on the part
of the Defendant?
5. Did Lord Wright consider that the possibility of an intermediate
examination which did not affect the purpose for which the product
was produced would avoid a duty of care arising'?
6. Did the possibility of a third party tampering with the product preclude
a duty of care being owed by the manufacturer?

NEGLIGENT STATEMENTS CAUSING LOSS

I: DERRY v. PEEK
1. Was there a contract between the plaintiff and defendants?
2. Did the defendants intentionally mislead investors?
3. Did the defendants act negligently in making the statement?
4. Did the plaintiff sue in negligence?
5. Does the House of Lords say there can be no recovery at all for
negligent misstatements?
6. What then is the ratio?
7. Why didn't the plaintiff change his statement of claim from deceit to
some other cause of action?

NOTE: One immediate result of Derry v. Peek was that Parliament was
moved to pass the Directors' Liability Act, 1890 {53 &54 Vict., c.

101
 64} which attempted to provide protection for investors relying
on prospectuses issued by Company directors.

II. LE LIEVRE v. GOULD

1. What does fraud mean?
2. Has Lord Esher (formerly Brett M.R) changes his mind in Le lievres
case since Heaven v. Peek.
3. What were the two rationes of the decisions

4. Do you agree with Lord Esher M.R. and Bowen L.J that Derry v. Peek
impliedly overruled Cann v. Willson (1888) 39 ch. D 39 and made it
possible to apply Lord Eshers Heaven v. Pender principle to negligent
misstatements as opposed to negligent acts?

II. LE LIEVRE v. GOULD

1. Did the court find there was a contract between the plaintiff the
defendant and the
defendant?
2. How did Viscount Haldane the defendant liable in tort for negligent?
3. How does Viscount Haldane evade the limits set out by Le Lievre &
Dennes v. Gould?
4. How does Viscount Haldane upon up a possible way of limiting the
supposed scope of Derry V. Peek?
5. Are solicitors always subject to fiduciary duties in practicing their
Profession?
6. Do you think it was significant that the defendant" Nocton, benefitted
from his misstatements?

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 IV: CANDLER v. CRANE CRISTMAS & CO.
1. Was there more than one ground or reason for the decision?
2. What is precedent sub silentio?
3. Does the "neighbour" principle cover all cases of harm caused
negligence?
4. Was the Court of Appeal bound to follow the ratio of the Le Lievre
case?
5. In what circumstances did Denning L.J. consider a duty of care in
respect of negligent statements arose?

V: HADLEY BYENE CO V. HELLER

1. Is the decision reached on the basis of Donoghues case or of another

principle,e.g. "special relationship"?
2. Are all the parts of the judgments set out "mere dicta"?
3. What is the authority now of Le Lievre v. Gould?
4. What view did their Lordships take of Derry v. Peek?
5. What view did their Lordships take of Candler v. Crane Christmas &
Co?
6. You have now read four judgments in each of which the conclusion was
that the defendant was not liable to the plaintiff. What differences in
reasoning in the judgments can you detect?
7. Why do you think their Lordships went to such length in elaborating
their opinions when they all agree that the presence of the disclaimer
of responsibility avoided liability?
THE CASES

(A) WINTERBOTTOM v. WRIGHT (1842) 10 M& W109

Winterbottom v. Wright Exch. Of pleas. June 6, 1842 10 M.+w. 109 A.

contracted with the Postmaster-General to provide a mail-coach to convey

103
the mail bags along a certain line of road; and B. and others also contracted
to horse the coach along the some line, B. and his co-contractors hired C. to
drive the coach:- Held, that C. could not maintain an action against, A. for
and injury sustained by him while driving the coach, by its breaking down
from latent defects in its construction.

Case The declaration stated, that the defendant was a contractor for the
supply of mail-coaches, and had in that character contracted for hire and
reward With the Postmaster General, to provide the mail-coach for the
purpose of conveying the mail-bags from Hartforg, in the county of Chester,
to Holyhead: That the defendant, under and by virtue of the said contract
had agreed with the said Postmaster-General that the said mail coach
should, during the said contract, be kept in a fit, proper, safe, and sacure
state and condition for the said purpose, and took upon himself, to wit, under
and by virtue of the said contract, the sole and exclusive duty, charge, care,
and burden of the repairs, state, and condition of the said mail-coach; and it
had become and was the sole and exclusive duty of the defendant, to wit,
under and by Virtue of his said contract, and having the means of knowing
and then well knowing all the aforesaid premises, the said mail-coach being
then in a frail weak, and infirm, and dangerous state and condition, to wit, by
and through certain latent defects in the state and, condition thereof, and
unsafe and unfit for the us and purpose aforesaid, and from no other cause,
circumstance, matter or thing whatsoever, gave way and broke down
whereby the plaintiff was thrown from his seat, and in consequence of
injuries then received, had become lamed for life.

Byles, for the defendant objected that the declaration was bad in substance.
This is an action brought. not against Atkinson and his co- contractors, who
were the employers of the plaintiff, but against the person employed by the
Postmaster General, and totally unconnected with them or with the plaintiff.
Now it is a general rule. that (III) wherever a

104
wrong arises merely out of the breach of a contract. which is the case on the
face of this declaration, whether the form in which the action is conceived be
ex-contract or ex-delicto, the party who made the contract alone can sue:
Tollif v. Sheratone (5 M. &. W. 283). If the rule were otherwise. and privity of
contract were not requisite, there would be no limit to such actions; If the
plaintiff may) as in this case. run through the length of three contracts, he
may run through any number or series of them; and the most a1aming
consequences would follow the adoption of such a principle. For example,
every one of the sufferers by such an accident as that which recently
happened on the Versailles railway might have an action against the
manufacturer of the defective axle. So, if the chain-cable of an East Indiaman
were to break, and the vessel went aground, every person effected, either in
person or property by the accident, might have an action against the
manufacturer, and perhaps against every seller also of the iron. Again,
suppose a gentleman`s coachman were injured by the breaking down of his
carriage, If this action be maintainable he might bring his action against the
smith or the coachmaker, although he could not sue his master, who is the
party contracting with him: Priestly v. Fowler (3 M. & W. l) There is no
precedent to be found of such a declaration except oneWentworth. 397,
which has been deemed very questionable. Petsort v. Cubbit (.. M&.. W. 710)
is an authority to show that the party ... tured by the negligence of another
cannot go beyond party who did the injury unless he can establish that the
latter stood in the relation of a servant to the party sued. On White v. Hague
(2 Dowl. & Ry. 33), when the plaintiff sued for an injury produced by the
explosion of a steam engine boiler. the defendant was personally present
managing the boiler at the time of the ac (l12)cident. Levy v. Langridge (4 M.
& W. 337) will probably be referred to on the other side. But that case was
expressly decided on the ground that the defendant, who sold the gun by
which the plaintiff was injured. although he did not personally contract with
the plaintiff, who was a minor, knew that it was bought to be used by him.
Here there is no allegation that the defendant that the coach was to be

105
driven by the plaintiff....,.. moreover, fraud was alleged in the
dec1aration,and found by ... injury: and there, too. the cause of injury was a
weapon of a dangerous nature, and the defendant was alleged to have had
notice of the defect in its construction. Nothing of that what appears upon
this declaration.

Peacock, contra. This case is within the principle of the decision in Levy v.
Langridge. Here the defendant entered into a contract with a public officer to
supply an article which from its nature and the use for which it was destined,
was necessary to be driven a coachman. That is sufficient to bring the case
within the rule established by Levy v. Lang ridge. In that case the contract
made by the father of the plaintiff with the defendant was aware on behalf of
himself and his family generally, and there was nothing to show that the
defendant was aware even of the existence of the particular son who was
injured. Suppose a party made a contract with government for a supply of
muskets one of which, from its misconstruction, burst and injured a soldier:
there it is dear that the use of the weapon by a solder would have been
contemplated. although not by the particular individual who received the
injury, and could it said since the decision in Levy v. Langridge, that he could
not bring action against the contractor? So, if a coachmaker, employed to
put on the wheels of a carriage, did it so negligently that one of them floe
off, and a child of the owner were thereby prepared the damage being the
natural and immediate consequences of his negligence, he would surely be
responsible. So if' a party entered into a contract to repair a church a
workhouse or other public building, and did it so insufficiently that a person
attending the former. or a pauper in the latter. were injured by the falling of
a stone, he could not maintain an action against any other person than the
contractor; but against him he must surely have a remedy. It is like the case
of a contractoring negligently leaves open a sewer, whereby a person
passing along the street is injured. It is clear that no action could be
maintained against the Postmaster-General: Hall v. Smith Humphreys v.

106
Mears (1 Man .. & R. 187); Priestly v. Fowler, but here the declaration alleges
the. accident to have occured through the defendant's negligence and want
of care. The plaintiff had no opportunity of seeing that the carriage was
sound and secure. Atkinson, B. The decision in Levy v. Lagridge proceeds
upon the ground of the knowledge and fraud of the defendant. Here also
there was fraud: the defendant represented the coach to be a proper state
for use, and whether he represented that which was false within his
knowledge, or a fact as true which he did not know to be so, it was equally a
fraud in point of law, for which he is responsible.

Lord Abinger, C.B. I am clearly of opinion that the defendant is entitled to our
judgment. We ought not to permit a doubt to rest upon this subject, for our
doing so might be the means of letting in upon us an infinity of actions. This
is an action of the first impression, and it has been brought in spite of the
precautions which were taken in the judgment of this Court in the case of
Levy v. Langridge, to obviate any notion that such an action could be
maintained. We ought not to attempt to extend the principle of that decision,
which, although it has been cited in support of this action, wholly fails as an
authority in its favour; for there the gun was bought for the use of the son,
the plaintiff in that action, who could not make the bargain himself but was
really and substantially the party contracting. Here the action is brought
simply because the defendant was a contractor with a third person; and it is
contended that thereupon he became liable to every body who might use the
carriage. If there had been any ground for such an action, there actions
against inkeepers, and some few other persons, no case of an similar nature
has occurred in practice. That is a strong circumstance, and is of itself a
great authority against its maintenance. It is however contended, that this
contract being made on the behalf of the public by the Postmaster-General,
no action could be maintained against him, and therefore the plaintiff must
have a remedy against the defendant. But that is by no means a necessary
consequence - he may be remediless altogether. There is no privity of

107
contract between these parties; and if the plaintiff can sue, every passenger,
or even any person passing along the road, who was injured by the upsetting
of the coach, might bring a similar action. Unless we confine the operation of
such contracts as this to the parties who entered into them, the most absurd
and outrageous consequences, to which I can see no limit, would ensue.
Where a party becomes responsible to the public, by undertaking a public
duty, he is liable, though the injury may have arisen from the negligence of
his servant or agent. So, in cases of public nuisances, whether the act was
done by the party as a servant, or in any other capacity, you are liable to an
action at the suit of any person who suffers. Those, however, are cases
where the real ground of the liability is the public duty, or the commission of
the public nuisance. There is also a class of cases in which the law permits a
contract to be turned into a tort; but unless there has been some public duty
undertaken, or public nuisance committed, they are all cases in which an
action might have been maintained upon the contract. Thus. a carrier may
be sued either in assumpist or case; but there is no instance in which a
party, who was not privy to the contract entered into with him can maintain
any such action. The plaintiff in this case could not have brought an action
on the contract; if he could have done so, what would have been his
situation, supposing the Postmaster-General had released the defendant?
that would, at all events, have defeated his claim altogether. By permitting
this action, we should be working this injustice, that after the defendant had
done everything to the satisfaction of his. employer, and after all matters
between them had been adjusted, and all accounts settled on the footing of
their contract, we should subject them to be ripped open by this action of
tort being brought against him.

Alderson, B. I am of the same opinion. . The contract in this case was made
with the Postmaster-General alone; and the case is just the same as if he had
come to the defendant and ordered a carriage, and handed it at once over to
Atkinson.

108
.
If we were to hold that the plaintiff could sue in such a case, there is no point
at which such actions would stop. The only safe rule is to confine the right to
recover to those who enter into the contract: if we go one step beyond that,
there is no reason why we should not go fifty. The only argument if favour of
the action is, that this is a case of hardship: but that might have been
obviated, if the plaintiff had made himself a party to the contract. Then it is
urged that it falls within the principle of the case of Levy v. Langridge. But
the principle of that case was simply this, that the father having bought the
gun for the very purpose of being used by the plaintiff, the defendant made
representations by which he was induced to use it. There a distinct fraud was
committed on the plaintiff; the falsehood of the representation was also
alleged to have been within the knowledge of the defendant who made it,
and he was properly held liable for the consequences. How are the facts of
that case applicable to those of the present? There is the allegation of
misrepresentation or fraud in this declaration? It shows nothing of the kind.
Our judgment must therefore be for the defendant.

GURNEY, B., concurred

ROLFE. B. The breach of the defendant's duty. stated in this declaration, in

his omission to keep the carriage in a safe condition; and when we examine
the mode in which that duty is alleged to have arisen, we find a statement
that the defendant took upon himself, to wit, under and by virtue of the said
contract, the sole and exclusive duty, charge. care, and burden of the
repairs, state and condition of the said mail-coach, and, during all the time
aforesaid, it had become and was the sale and exclusive duty of the
defendant. to wit, under and by virtue of his said contract, to keep and
maintain the said mail-coach in a fit, proper, safe, and secure state and
condition. The duty. therefore. is shown to have arisen solely from the
contract; and the fallacy consists in the use of that word "duty." If a duty to

109
the Postmaster-General be meant, that is true; but if a duty to the plaintiff be
intended (and in that sense the word -is evidently used), there was none.
This is one of those unfortunate cases in which there certainly has been
damnum, absque injuria; it is. no doubt, a hardship upon the plaintiff to be
without a remedy, but by that consideration we ought not to be influenced.
Hard cases, it has been frequently observed, are apt to introduce had law.

Judgement for the defendant.

(B) LONGMEID v. HOLLIDAY (1951) 6 EX. 760

The declaration stated, that the defendant, before and at the time of the
committing of the grievances, ~& c., was the maker and seller of certain
lamps. called "The Holliday Lamp," to be used for the purpose of burning in
and giving light to houses, shops and rooms; and thereupon hitherto, to wit.
on &c .. the plaintiff Frederick Longmeid at the - request of the defendant,
bargained with him to buy of him one of the said "Holliday Lamps," to be
burnt and used by the plaintiff Frederick Longmeid and his wife, in the shop
and rooms of the plaintiff Frederick Longmeid, at and for a certain price, to
wit. 10s.; and the defendant then, during such bargain, falsely, fraudulently,
and deceitfully warranted to the- plaintiff Frederick Longmeid, that the said
lamp then was reasonably fit and proper to be used for the purpose last
aforesaid: and the defendant thereby induced the plaintiff Frederick
Longmeid to buy the said lamp; and accordingly, by the means aforesaid,
then sold the [762] same to the plaintiff Frederick

Longmeid for the said sum of money, which the plaintiff Frederick Longmeid
then paid to the defendant: Whereas in fact the said lamp was not, at the
time of the sale and warranty aforesaid, nor afterwards hitherto, reasonably
fit and proper to be used for the purpose of being burnt and used by the
plaintiffs, but was then made of weak and insufficient materials, and then

110
was cracked and leady, dangerous, unsafe, as aforesaid, the said lamp
afterwards to wit, on &c., when the plaintiff Eliza Longmeid, knowing and
confiding in the said warranty, lighted the said lamp, and attempted, to use
and burn the same in a certain shop of the plaintiff Frederick Longmeid, and
whilst she was holding the same in her hand, burst, exploded, and flew to
pieces; and the spirit and naphtha then contained therein, for the purpose of
burning and lighting the same, then ignited and ran upon and over the
plaintiff Eliza Longmeid, whereby the plaintiff Eliza Longmeid, then and still
being the wife of the plaintiff Frederick Longmeid, became and was greatly
burned, scorched. and wounded. &c.

Plea. First, not guilty. Secondly, that the plaintiff Frederick Longmeid did not
bargain with the defendant to buy one of the said lamps of the defendant, to
be burnt and used by the plaintiff and his said wife in the shop and rooms of
the plaintiff, modo et forma. Upon which issues were joined.

At the trial, before Martin, B., at the Middlesex' Sittings in last Michaelmas
Term, it appeared that the defendant, who kept a shop in London for the sale
of lamps, (but who was not himself a manufacturer,) sold a lamp. called
"Holliday's Patent Lamp". to the plaintiffs wife, for the purpose of being used
by him and his wife. There was evidence that the lamp was defectively
constructed, but [763] no proof that the defendant (who did not personally
construct it. himself: but had it put together by others in parts purchased
from third parties,) knew of the defect; and the jury found that he was not
guilty of any fraudulent or deceitful representation, but sold the lamp in good
faith. In using the lamp with naphtha it exploded, and the' plaintiffs wife met
with considerable personal injury, for which the two plaintiffs brought this
action, the plaintiff Frederick Longmeid having previously recovered
damages in another action for the defendant's breach of implied warranty of
sale. The

111
jury found all the facts for the plaintiffs, except the allegation of fraud, they
being not satisfied that the defendant knew of the defects. The defendant's
counsel thereupon objected that, as fraud was not proved, the action would
not lie. The learned Judge inclined to that opinion, but declined to stop the
case, and directed a verdict to be entered for the plsintiffs, reserving to the
defendant liberty to move to enter the verdict for him or for a nonsuit.

Watson having obtained a rule nisi accordingly ... son who delivers 4, c. 68,
must, in Miller, Serjt., (with whom was R.B. Miller} shewed cause to him the
nature Easter Terry (May 3). The lamp in question was sold for being used in
the plaintiffs' shop; and consequently there was action be made, the fact
that it was fit for: that purpose: Jones v. Bright (5 Bing. 533)red by that
statute, (2 M. & G. 279), Shepherd v. Pybus (3 M. & G. 868), morley v.,
Exchequer ChamberTIber,500). [Parke, B. Assuming that to be so, how can
the wife be) breach of duty arising soley from contract, but conduct
amounting to fraud. When the lamp was purchase told the purchase ... [764]
pose for which it was wanted; and though he ... of the defect, he is' equally
responsible, if he represented it as in case, containing. There is a
general duty on every shopkeeper who sells articles, pairs of silk hose not,
become dangerous, to take care that they are proper for use. If he is the
manufacturer, and therefore is not aware that the article is unsafe, he should
so inform the purchaser; but if he sells it as secure, he is guilty of a breach of
duty, which renders him responsible to every one who is in consequence
injured. [Parke, B. Everard v. Hopkins (2 Bulst. 332) is an authority that a
person may maintain an action for a breach of duty arising out of a contract
with a third person: Coke, C.J., there puts this case, "If the master sends his
servant to pay money for him upon the penalty of a bond and in his way, a
smith in shoeing doth prick his horse, and so, by reason of this, the money is
not paid; this being the servant's horse, he shall have an action upon the
case for pricking of his horse; and the master also shall have his action upon
the case for the special wrong which he hath sustained by the non-payment

112
of his money occasioned by this."That cause of action is certainly rather
remote. This case falls within the principle of the decision in Langridge v.
Levy (2 M. & W. 519): there the defendant sold to the father of the plaintiff a
gun for the use of himself and his sons, with a warranty that it was safe and
secure; and the gun having afterwards exploded and wounded the plaintiff, it
was held that might recover. Afrom his unskillful treatment, although the
patient neither employed nor was to pay him. Pippin v. Sheppard ( 11 Price,
400) Gladwell v. Steggall (5 Bing. N.C. 733; 8 Scott, 60) Winter bottom v.
Wright (10 M & W. 109) [765] will probably be relied on by the other side; but
that case is distinguishable, in as much as there the plaintiff was no party to
the contract, neither was there any breach of duty towards him.

Watson (with whom was Webster), in support of the rule. It is conceded, on

the authority of Langridge v. Levy that where a person knowingly sells to
another a dangerous article under a false representation of its safety being
well aware that the article is to be used by a third person, the latter may
maintain an action for the injury sustained by him in consequence of its
defective construction. The principle of decision is, that where damage
results from a fraudulent responsentation, the party guility of the fraud is
responsible to the party injured. Here, however, the jury have negative fraud,
so that the action is not founded on a breach of duty, but depends simply on
contract; and the contract was with the husband alone. The case of a
surgeon bears no analogy to the present. His liability arises from the
common law obligation to use due care and skill towards his patient, by
whomsoever employed. In like manner, a stage coach proprietor is bound to
exercise due caution in driving, and, if he neglects to do so, he is liable to
any person who is thereby injured. But no duty is imposed on a tradesman to
furnish articles fit for the purpose of every individual into whose hands they
may come. Such a doctrine would be productive of the greatest injustice. For
instance, if an accident occurred to an omnibus or a steam boat in

113
consequence of some latent defect in the construction, could every
passenger injured maintain an action against the respective builders?
Winterbottom v. Wright is an express authority to the contrary Ormerod v.
Ruth (14 M. & W. 651) decide that, upon a sale of goods without warranty,
the purchaser cannot recover in respect [766] of a representation made by
the vendor as to the quality of the goods, which turns out to be false in fact,
unless such representation was false to the knowledge of the vendor, or he
acted fraudulently in making it. Here the order was for a certain described
and ascertained article, of which the defendant was patentee, and that was
supplied; so that the case falls within the principle of Chanter v. Hopkins ex
W. 399).

There are other cases, no doubt, besides those of fraud, [767] in which a
third person, though not a party to the contract, may sue for the damage
sustained, if it be broken. These cases occur where there has been a wrong
done to that person, for which he would have had a right of action, though
no such contract had been made. As for example, if an apothecary
administered improper medicines to his patient, or a surgeon unskillfully
treated him, and thereby injured his health, he would be liable to the patient
even where tile father or friend of the patient may have been the contracting
party with the apothecary or surgeon; for though no such contract had been
made, the apothecary, if he gave improper medicines, or the surgeon, if he
took him as a patient and unskillfully treated him would be liable to an action
for a misfeasance: Pippin v. Sheppard (11 Price, 40), Gladwell v. Steggal (8
Scott. 60; 5 Bing. N.C. 733). A stage-coach proprietor, who may have
contracted with a master to carry his servant, if he is guilty of neglect, and
the servant sustains personal damage, is liable to him; for it is a misfeasance
towards him, if, after taking him as a passenger, the proprietor or his servant
drives without due care, as it is a misfeasance towards any one travelling on
the road. So, if a mason contract to erect a bridge or other work in 'a public
road, which he constructs, but not according to the contract, and the defects

114
of which are a nuisance to the highway, he may be responsible for it to a
third person, who is injured by the defective construction, and he cannot be
saved from the consequences of his illegal act, in committing the nuisance
on the highway by shewing that he was also guilty of a breach of contract
and responsible for it. And it may be the same when any one delivers to
another without notice an instrument in its nature dangerous, or under
particular circumstances, as a loaded gun which he himself loaded, and that
other person to whom it is delivered is injured thereby, or if he places it in a
situation easily accessible 1768) to a third person, who sustains damage
from it. A very strong case that effect is Dixon v. Bell (5 M'. & Selw. 198). But
it would be going much too far to say, that so much care is require in the
ordinary intercourse of life between one individual and another, that, if a
machine not in its nature dangerous, a carriage for instance, - but which
might become so by a latent defect entirely unknown. although discoverable
by the exercise of ordinary care, should be lent or given by one person, even
by the person- who manufactured it, to another, the former should be
answerable to the latter for a subsequent damage accruing by the use of it.
Could it be contended with justice in the present case, that if the lamp had
been lent or given by the defendant to the plaintiffs wife, and used by her,
he wou1d have been answerable for the personal damage which she
sustained, the defendant not knowing or having any reason to believe it was
not perfectly safe, although liable to the party to whom he contracted to sell
it, upon an implied warranty that it was fit for use, so far as reasonable care
could make it for the breach of that contract as to all damage sustained by
him.

We are of opinion, therefore, that if there had been in this case a breach of
contract with the plaintiffs, the husband might have sued for it but there
being no misfeasance towards the wife independently of the contract, she
cannot sue and join herself with her husband. Therefore a nonsuit must be
entered. Rule absolute.

115
(C) GEORGE AND WIFE v. SKIVINGTON. (1869) L.R EX.1

This was an action by the plaintiffs, Joseph George and Emma his wife,
against the defendant a chemist, to recover damages in compensation for
injuries received by the wife from the use of a hair wash, purchased by them
of him for the expressed purpose of being used by the wife, and which
proved on trial to be deleterious in its effects upon the head and hair
whereby she received injuries. By the first count of their declaration the
plaintiffs charged that the defendant carried on the trade and business of a
chemist, and in the course of such business of a chemist and in the course of
such business professed to sell a chemical compound made of certain
ingredients, known only to the defenant. and which he professed and
represented to be fit and proper to be used for washing the hair, and which
could and might be so used without personal injury to the person using the
same, and to have been carefully and skillfully and properly compounded by
him the defendant. And thereupon the plaintiffs, so being husband and wife,
bought of the defendant, and the defendant, a bottle of the said compound
to be used by the plaintiff Emma, then and still being the wife of the said
Joseph George, for washing her hair, as the defendant then knew, and on the
terms that the same then was fit and proper to be so used, and could be
safely used by her by the purpose aforesaid without personal injury to her.
and that it had been skillfully, carefully, and properly compounded by the
defendant; yet the defendant had so unskillfully, negligently, and improperly
conducted himself in and about the making and selling the said compound,
that by and through the mere unskilfulness; carelessness, negligence, and
wrongful and improper conduct of the defendant in that behalf, the said
compound was not fit or proper to be used for washing the hair, nor could it
be so used without personal injury to the person using the same, by reason
of which premises, and of the mere unskilfulness, carelessness, negligence,
and wrongful and improper conduct of the defendant in that behalf, the

116
plaintiff Emma, then and still being the wife of the plaintiff Joseph George,
who used the said compound for washing her hair, pursuant to and according
to the terms upon and for which the same was so sold by the defendant,
was, by so using the same, injured in health and suffered pain and
inconvenience from so using the same, and her hair was destroyed and
injured, and she was is otherwise injured.

The defendant demurred to this count of the declaration, on the ground that
it failed to show any neglect of duty by the defendant in respect of the
plaintiff Emma.

Joinder in Demurrer by the plaintiffs.

The points for argument on the part of the defendant were first, that the
first count fails to show any breach of duty committed by the defendant in
respect of the plaintiff Emma secondly, that the count is defective for failing
to show that the defendant knew of the deleterious nature of the compound:
thirdly, that the contract stated ill the first count of the declaration is one for
a breach of duty, for which the husband alone could sue; fourthly that a
contract of sale cannot legally take place to a husband and wife jointly.

The following were the points for argument on the part of the plaintiffs -first.
that a husband and wife may sue on a contract touching the person of the
wife, as on a contract to carry the wife's person, or for medical treatment,
and the contract declared on is of this class; secondly the purchase of the
hair wash as properly prepared for application, related to the original
preparation and raised the same duty of the defendant towards the plaintiffs
as if they had employed him to prepare it for such purpose.

Lord, for the defendant, in support of the demurrer to the declaration, argued
that the first point was, whether or not there was any duty on the defendant,

117
independently of contract; and he contended that the first count showed no
duty on the part of the defendants towards, the wife, independently of the
contract, and that she need not have been joined, The allegation in the count
was a contract of sale to the plaintiff and his wife. There was no duty here as
in the case of a medical man. A common ordinary tradesman does not hold
himself out to be skilful. The husband may sue alone for any injury done to
his wife, but they cannot jointly sue as on a duty in the defendant unless it is
shown that the defendant knew that the article was not what it purported to
be. Independently of' contract, there was here no misfeasance towards the
wife. It is essential that deceit on the defendant's part should be alleged and
proved, e.g., that he had knowledge of the unfitness for use of the article
compounded. [CLEASBY, B. refers to Langridge v. Levy, 2 M. & W. 519; 6 L.J.,
N.S., 137, Ex. In that case knowledge was alleged and proved, and judgment
was given for the plaintiff there on that very ground, the defendant being
held liable for the injury caused to the plaintiff, the son, by the bursting of
the gun, upon the express and sole ground that he knew its dangerous
condition when he sold it to the plaintiffs father for the use of the plaintiff.
But here there is no allegation of knowledge on the defendant's part of the
injurious properties of this hair wash. How then can he be held liable for
damage received by its use by a third person, a stranger to the contract? So
in Longmeid and Wife v. Holliday (also in this court), 6 Ex. 761; 20 L.J., N.S.,
430, Ex., it was held that a tradesman, who contracts with an individual for
the sale to him of an article to be used for a particular purpose by a third
person, was not, in the absence of fraud, liable for injury caused to such
person by some defect in the construction of the article. There is no principle
of law that a tradesman, has a duty to a purchaser independently of
contract. No doubt, as a chemist, the defendant might be liablefor
carelessness in putting up a prescription; but as a chemist he is not
responsible for a hairwash sold over the counter in the ordinary way.
[PIGOTT, B.- He professes to make this wash from ,-"ingredients known only
to himself," and represents it to be fit for use, and it turns out to be a poison,

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and destroys, the woman's hair] In Lang ridge v. Levy, in the Exchequer
Chamber, 4 M. & W. 337; 7 L.J., N.S., 337 Ex., Lord Denman,. C.J delivering
the judgment of that court, affirming that of the court below, does so
expressly on the ground stated below by Parke, B, in this court, "that, as
there is fraud and damage, the result of that fraud, not from an act remote
and consequential, but one contemplated by the defendant at the time as
one of its results, the party guilty of the fraud is responsible to the party
injured." Holliday's case shows there is no right of action by a stranger to
the contract un1ess that stranger show knowledge or fraud on the
defendfunt's part. Again, there is no implied warranty that an article sold in
the ordinary way is fit for the purpose for which it is sold. That was so held in
a recent case in this court with respect to meat, where it was decided that
there was no implied warranty of its fitness for human food: (Emmerton v.
Matthews, 5 L.T. Rep. N.S. 681; 31 L.J. 139, Ex; 7 H. & N. 586.) [CHANNEL. B.
refers to Winterbottom v. Wright, 10 M. & W. 109, 11 L.J., N.S., 415, Ex., in
which Lord Abinger, C.B., at p. 115 of 10 M. &W., discussing the question of
duty in such cases, says: There is also a class of cases in which the law
permits a contract to be turned into a tort; but unless there has been some
public duty undertaken, or public nuisance committed, they are all cases in
which an action might have been maintained upon the contract.] Negligence,
in these cases, must be either with regard to contract or with regard to public
duty. He referred also to the judgment of Lord Cairns. L.C. in Macfarlane v.
Taylor, in the House of Lords. L. Rep. 1 Scotch App. 245.

J.P. Ingham contra for the plaintiffs, was not called upon to support the
declaration.

The court having suggested an amendment of the declaration, it was agreed

by the learned counsel on both sides that it should be amended by striking
out the allegation of a joint purchase of the wash by the husband and wife,
and stating it to have been bought by the husband alone, for the purpose of

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being used by the wife. This amendment being taken as made, the learned
Barons proceeded to give judgment on the demurrer as follows:

Kelly. C.B.- The declaration being amended, it now stands as a contract and
purchase by the plaintiff Joseph George alone, of the article in question for
the use of his wife, and I am of opinion that the plaintiffs are entitled to the
judgment of the court. The facts as stated in the declaration are, that the
defendant carried on the business of a chemist, and in the course of such
business professed to sell a chemical compound made of ingredients known
only to himself, and which he professed and represented to be fit and proper
to be used as a wash for the hair, without personal injury to the person using
the same, and to have been carefully, skillfully, and properly compounded by
him, and it is then stated that
thereupon the plaintiff, the husband, purchased this article of the defendant
at a certain price. for the purpose of its being used by is the plaintiffs wife for
washing her hair, upon the express terms that it was fit and proper to be so
used, and could be safe1y used for that purpose without personal injury to
the person so using it. The defendant" then it appears, had sold this article
for a particular purpose which was known to him at the time he so sold it
namely, for use as a hair wash by the plaintiffs wife, The declaration then
proceeds to allege that the defendant so unskillfully, negligently, and
improperly conducted himself in and about making and selling the said
compound, that by reason of such unskilfulness, negligence, and improper
conduct of the defendant the said compound was not fit or proper to be used
for washing the hair, nor could it be so used without producing personal
injury to the person using it. And it then goes on to allege that by reason
such unskilfulness carelessness, and improper conduct of the defendant in
that behalf, the plaintiffs wife. who used the said compound for washing her
hair, pursuant to the terms upon which the same was so sold by the
defendant to the plaintiff, was, by using the same, injured in health, and
suffered pain, and her hair was destroyed. It has been urged, and was

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contended on the part of the defendant, first of all that there was here no
warranty, express or implied; but it is unnecessary to enter into that question
as it does not arise in the present case, for here there was a purchase by the
plaintiff from the defendant of this hair wash, and the purpose for which it
was bought and to which it was going to be applied, was known to the
defendant, the compounder of it, at the time he sold it. The question is
whether a tradesman who sells an article for a particular purpose and which
article he has professed to compound himself for that purpose, has not a
duty imposed on him by law to be careful in the compounding and selling it. I
think that every one who compounds and sells an article to be used for a
particular purpose is bound and has a duty cast upon him to compound it
with due care and ordinary skill, and in such a way and with such materials
that the use of it by the person buying it, or for whom it is bought, shall not
be productive of personal injury. Here there is an allegation of the absence of
such care and skill. The case of Langridge v. Levy (ubi sup) which has be
cited and referred to during the argument, is important as bearing upon a
further question which has been raised here, namely, whether the onus,
which is imposed by law upon the
compounder and vendor of an article towards the person purchasing it and
using it, applies also to a third person who is not the purchaser but who
happens to be the person for whom it was bought, and who uses the article,
and is injured by so using it. For instance, where an article is bought by A. for
the purpose of its being used by B. does the duty which is on the seller
extend in such a case to B.? I am of opinion that it does.

In Langridge v. Levy there was no contract between the plaintiff and

defendant, but the latter knew that the father bought the gun for his sons
(the plaintiffs) use; and in the present case the defendant was aware that
the wash bought by the plaintiff for his wifes use in washing her hair and
that is stated and alleged in the declaration I think, therefore, that a duty
arose on the part of the defendant here, knowing as he did at the time of the

121
sale of the article that it was for the purpose of being used as a wash for the
hair, to use due care and skill in compounding it, so that it should be fit for
the purpose of being so used, and that it might be so used with safety; and I
am of opinion that that duty extends not only to actual purchaser of the
article but also to the person for whom it was bought. There is an allegation
of carelessness negligence and unskilfulness and under these circumstances
I am of opinion that there was a duty on the defendant which has been
violated by him, and that he is, as the seller of the article, liable, since the
knew the purpose for which it was expressly purchased. In the lamp case
(Longmeid and wife v. Holliday, ubi sup), there was neigher breach of
warranty, negligence, nor breach of duty. It is therefore, quite a different
case. My brother Channell, who has just left the court, has desired me to say
that he concurs with the rest of the court in their view of the present case.

Pigott, B, - I am of the same opinion. The count in the declaration demurred

to in this case is founded on a charge of negligence of duty on the part of the
defendant, as a chemist, in compounding and selling an article for a
particular purpose. Had the article been bought by the husband for his own
use, and the action been brought by him alone, it cannot be doubted that it
would have been maintainable. Then, if the article be purchase by the
husband for his wifes use, and that was known to the defendant, I cannot
see how it can be reasonable suggested that the defendants duty is not the
same. If a father takes a prescription, intended for himself, gives it to his
young child, who is injured by taking medicine was for the father`s use. But
those circumstances

would be altogether different from those of the present case. It would be a

monstrous thing to say that a married woman, receiving an injury in this
manner, could have no remedy for the damage done to her. I think the
defendant's duty extended to the wife, and that she can recover for a direct
damage done to her, joining her husband in the action for conformity`s sake.

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Cleasby, B, - I am of the same opinion. I think the declaration shows a good
cause of action on the part of the wife. Taking the contract by itself, no
person can sue on it but a party to it. Langridge v. Levy is in point. That
objection was taken there, and the answer to it was that there was fraud.
There is a complete analogy between that case and the present one, putting
the fraud in the former case for the negligence in the latter. The only
question is, whether the facts raise a duty in the defendant to use due and
reasonable care in compounding the article which he represented to be fit
and proper for use, and capable of being used by the wife without injury to
her. The moment that duty arises, there is a clear case of negligence here on
the defendant`s part in a matter in which there was a duty, and an injury
directly, and not remedy, arising from that negligence to the wife. It appears
to me to be a case very similar to Langridge v. Levy.

Judgement for the plaintiff. The declaration to be amended as agreed upon.

Attorney for the plaintiffs, J. M. Dobson, 4, York-street, Portman-square,W.

Attorney for the defendant, Edward M. Hore Lincoln`s-infields, W.C

123
 D) HEAVEN v. PENDER (1883) 11 QBD 503

BRETT, M.R. In this case the plaintiff was a workman in the employ of Gray,
a. ship painter. Gray entered into a contract with a ship owner whose ship
was in the defendant's dock to paint the outside of his ship. The defendant,
the dock owner, supplied, under a contract with the shipowner, an ordinary
stage to be slung in the ordinary way outside the ship for purpose of painting
her. It must have been to the defendant a servants, if they had considered
the matter at all, that the stage would be put to immediate use, that it would
not be used by the shipowner, but that it would be used by such a person
as,the plaintiff, a working ship painter. The ropes by which the stage was
slung and which were supplied as a part of the instrument by the defendant,
had been scorched and were supplied without a reasonably careful attention
to their condition. When the plaintiff began to use me stage the ropes broke,
the stage fell, and the plaintiff was injured. The Divisional Court held that the
plaintiff could not recover against the defendant. The plaintiff appealed. The
action is in form and substance an action for negligence. That the stage was,
through want of attention of the defendants servants, supplied in a stage
unsafe for use is not denied. But want of attention mounting to a want of
ordinary care is not a good cause of action, although injury ensue from such
want, unless the person charged with such want of ordinary care had a duty
to the person complaining to use ordinary care in respect of the matter
called in question. Actionable negligence consists in the neglect of the use of
ordinary care or skill towards a person to whom the defendant was the duty
of observing ordinary care and skill by which neglect the plaintiff, without
contributor, negligence on his part has suffered injury to his person or
property. The question in this case is whether the defendant owed such a
duty to the plaintiff.

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If a person contracts to use ordinary care or skill towards him or his property
the obligation need not be considered in the light of a duty; it is an obligation
of contract. It is undoubted, however, that there may be the obligation of
such a duty from one person to another although there is no contract
between them with regard to such duty. Two drivers meeting have no
contract with each other, but under certain circumstances they have
reciprocal duty towards each other. So two ships navigating the sea. So a
railway company which has contracted with one person to carry another has
no contract with the person carried but has a duty towards that person. So
the owner or occupier of house or land who permits a person or persons to
come to his house or land has no contract with such person or persons, but
has a duty toward him or them. It should be observed that the existence of a
contract between two persons does not prevent the existence of the
suggested duty between them also being raised by law independently of the
contract by the facts with regard to which the contract is made and to which
it applies an exactly similar but a contract duty. We have not in this case to
consider the question of fraudulent misrepresentation express or implied,
which is a well recognized head of law. The question which we have to solve
in this case are what is the proper definition of the relation between two
persons other than the relation established by contract, or fraud, which
imposes on the one of them a duty towards the other, observe, with regard
to the person or property of such other such ordinary care or skill as may be
necessary to prevent of such other, such ordinary care or skill as may be
necessary to prevent injury to his person or property and whether the
present case fails within such definition. When two drivers or two ships are
approaching each other, such a relation arises between them which they are
approaching each other in such a manner that, unless they use ordinary care
and skill to avoid it, there will be danger of an injurious collision between
them, not only if it be proved that they actually know and think of this
danger, but whether such proof be made or not. It is established, as it seems
to me because any one of ordinary sense who did think would at once

125
recognize that if he did not use ordinary care and skill under much
circumstance there would be such danger. And every one ought by the
universally recognized rules of right and wrong, to think so much with regard
to the safety of others who may be jeopardized by his conduct; and if, being
in such circumstances, he does not think, and in consequence neglects or if
he neglects to use ordinary care or skill, and injury ensue, the law which
takes cognizance of and enforces the rules of right and wrong, will force him
to give and indemnity for the injury. In the case of a railway company
carrying a passenger with whom it has not entered into the contract of
carriage the law implies the duty because it must be obvious that unless
ordinary care and skill be used the personal safety of the passenger must be
endangered.
With regard to the condition in which an owner or occupier leaves his house
or property other phrascology has been used, which it is necessary to
consider. If a man opens his shop or warehouse to customers it is said that
he invites them to enter, and that this invitation raises the relation between
them which imposes on the invitor the duty of using reasonable care so to
keep his house or warehouse that it may not endanger the person or
property of the person invited. This is in a sense an accurate phrase, and as
applied to the circumstances a sufficiently accurate phrase. Ye it is not
accurate if the word "invitation" be used in its ordinary sense. By opening a
shop you do not really invite, you do not ask L.B. to come in. to buy; you
intimate to him that if it please him to come in he will find thing which you
are willing to sell. So in the case of shop, warehouse, road or premises, the
phrase has been used that if you permit a person to enter them you impose
on yourself a duty not to lay a trap on him. This again is in a sense a true
statement of the duty arising from the relation constituted by the permission
to enter. It is not a statement of what causes the relation which raises the
duty. What cause the relation is the permission to enter and the entry. But it
is not a strictly accurate statement of the duty. To lay a trap means in

126
ordinary language to do something with an intention. Yet it is clear that the
duty extends to a danger the result of negligence without intention. And with
regard to both these phrases though each covers the circumstances to which
it is particular applied, yet it does not cover the other set of circumstances
from which an exactly similar legal liability is inferred. It follows, as it seems
to me, that there must be some larger proposition which involves and covers
both sets of circumstances. The logic of inductive reasoning requires that
where two major propositions lead to exactly similar minor premises there
must be a more remote and larger premise which embraces both of the
major propositions. That, in the present consideration. is, as it seems to me,
the same proposition which will cover the similar legal liability inferred in the
cases of collision and carriage. The proposition which these recognised cases
suggest, and which is, therefore, to be deduced from them. is that whenever
one person is by circumstances placed in such a position with regards to
another that every one of ordinary sense who did think would at once
recognise that if he did not use ordinary care and skill in his own conduct
with regard to these circumstances he would cause danger of injury to the
person or property of the other, a duty arises to use ordinary care and skill to
avoid such danger, without displacing the other propositions to which
allusion has been made as applicable to the particular circumstances in
respect of which they have been enunciated, this proposition includes, I
think, all the recognised cases of -liability. It is the only proposition which
covers them all. It may, therefore, safely be affirmed to be a trade
proposition, unless some obvious case can be stated in which the 1iability
must be admitted to exist, and which yet is not within this proposition. There
is no such case. Let us apply this proposition to the case of the person
supplying goods or machinery, or instruments or stensil, or the like, for the
purpose of their being used by another person, but with whom there is no
contract as to the supply. The proposition will stand thus; whenever one
person supplied goods or machinery, or the like, for the purpose of their
being used by another person under such circumstances that every one of

127
ordinary sense would, if he thought, recognised at once that unless, he used
ordinary-y care and skill with regard to the condition of the thing supplied or
the mode of supplying it, there will be danger of injury to the person or
property of him for whose use the thing is supplied, and who is to use it, duty
arises to use ordinary care and skill as to the condition or manner of
supplying such thing. And for a neglect of such ordinary care or skill whereby
injury happens a lega1liability arises to be enforced by an action for
negligence . This inc1udes the case of goods, & c., supplied to be used
immediately by a particular person or one of a class of persons, where it
would be obvious to the person supplying, if he thought, that the goods
would in all probabi1ity be used at once by such persons before a reasonable
opportunity for discovering any defect which might exist, and where the
thing supplied would be of such a nature that a reglect of ordinary care or
skill as to its condition or the manner of supplying it would probably cause
danger to the person or property of the person for whose use it was supplied,
and who was about to use it. It would exclude a case in which the goods are
supplied under circumstances in which it would be a chance by whom they
would be used or whether they would be used or not or whether they would
be used before there would probably be means of observing any defect, or
where the goods would be of such a nature that a want of care or skill as to
their condition or the manner of supplying them would not probably produce
danger of injury to person or property. The cases of vendor and purchaser
and lender and hirer under contract need not be considered, and the liability
arises under the contract and not merely as a duty imposed by law, though it
may not be useless to observe that it seems difficult to import the implied
obligation into the contract except in cases in which if there were no contract
between the parties the law would according to the rule above stated imply
the duty Examining the rule which has been above enunciated with the cases
which have been decided with regard to goods supplied for the purposes of
being used by persons with whom there is no contract, the first case to be
considered is invetably langridge v. Levy (1) It is not an easy case to act

128
upon. It is not it cannot be, accurately reported the questions left to the jury
are stated. And then it is said that a motion was made to enter a nonsuit in
pursuance of leave reserved on particular grounds. These grounds do. Not
raise the question of fraud at all, but only the question of remoteness. And
although the question of fraud seems in a sense to have been left to the jury
yet no question was, according to the report, left to them as to whether the
plaintiff acted on the faith of the fraudulent misrepresentation which is,
nevertheless a necessary question in a case of fraudulent misrepresentation
The report of the argument makes the object of the argument depend
entirely upon an assured motion to arrest the judgment, which raises always
a discussion depending entirely on the from of the declaration, and the effect
on it of a verdict in respect of which it is assumed that all questions were let
to the jury, If this was the point taken the report of the evidence and of the
question left to the jury is idle The case was decided on the ground of a
fraudulent misrepresentation as stated in the declaration. It is inferred that
the defendant intended the representation to be communicated to the son.
Why he should have such an intention in fact it seems difficulty to
understand. His immediate object must have been to induce the father to
buy and pay for the gun. It must have been wholly indifferent to him whether
after the sale and payment the gun would be use or not by the son I cannot
hesitate to say that, in my opinion, the case is a wholly unsatisfactory case
to act on as an authority. But taking the case to be decided on the ground of
a fraudulent misrepresentation made hypothetically to the son, and acted
upon by him, such a decision upon such a ground, in. no way negatives the
proposition that the action might have been supported on the ground of
negligence without fraud. It seems to be a case which is within the
proposition enunciated in this judgment and in which the action might have
been supported without proof of actual fraud. And this seems to be the
meaning of Cleasby, B., in the observations he made on Langridge v. Levy
(1) in the case of George v. Skivington. (2) In that case the proposition laid
down in this judgment is.

129
Skivington. (2) In that case the proposition laid down in this judgment is
dearly adopted. The ground of the decision is that the article was, to the
knowledge of the defendant supplied for the use for the use of the wife and
for her immediate use. And certainly, if he or anyone in his position had
thought at all, it must have been obvious that a want of ordinary care or skill
in preparing the prescription sold, would endanger the personal safety of the
wife.

In Corby v. Hill (3) it is stated by the Lord Chief Justice than an allurement
was held out to the plaintiff. And Willes, J. stated that the defendant had no
right to set a trap for the plaintiff. But in the form suggested by Willes, J. on
p. 567, there is no mention of allurement, or invitation, or trap. The facts
suggested in that form are, that the plaintiff had license to go an the road,
that he was in consequence accustomed and likely to pass along it, that the
defendant knew of that custom and probability, that the defendant
negligently placed slate in such a manner as to be likely to prove dangerous
to persons driving along the road, that the plaintiff drove along the road,
being by reason of the license lawfully on the road, and that he was injured
by the obstruction.It is impossible to state a case more exactly within the
proposition laid down in this judgment. In Smith v. London and St. Katharino
Docks Co. (4), the phrase is again used of invitation to the plaintiff by the
defendants. Again, let it be observed that there is no objection to the phrase
as applied to the case. But the real value of the phrase may not improperly
be said to be, that invitation imports knowledge by the defendant of the
probable use by the plaintiff of the article supplied, and therefore carries with
it the relation between the parties which establishes the duty. In Indermaur
v. Dames (1) reliance is again placed upon a supposed invitation of me
plaintiff by the defendant. But again, it is hardly possible to state facts which
bring a case more completely within the definition of the present judgment.

130
In Winterbottom v. Wright (2) It was held that there was no duty cast upon
the defendant with regard to the plaintiff. The case was decided on what was
equivalent to a general demurrer to the declaration. And the declaration
does not seem to show that the defendant. if he had thought about it, must
have know, or ought to have known that the couch would be necessarily or
probably driven by the plaintiff, or by any class of which he could be said to
be one, or that it would be so driven within any time which would make it
probable that the defect would not be observed. The declaration relied too
much on contracts entered into with other persons than the plaintiff. The
facts alleged did not bring the case within the proposition herein
annunciated. It was attempt to establish duty towards all the world. The
case was decided on the ground of remoteness. And it is as to too great a
remoteness that the observation of Lord Abinger is pointed, when he said
that the doctrine of Langridge v. Levy (3) is not to be extended, In Francis v.
Cockrell (4) the decision is put by some of the judges on an implied contract
between the plaintiff and the defendant. But Cleasby, B. (p. 515), puts it
upon the duty raised by the knowledge of the defendant that the stand was
to be used immediately by person of whom the plaintiff was one. In other
words he acts upon the rule above laid down In Collis v. Seldan (5) it who
held that the declaration disclosed no duty. And obviously, the declaration,
was too uncertain there is nothing to show that the defendant it knew more
of the probability of the plaintiff rather than any other of the public being
near the chandelier. There is nothing to show that the plaintiff was more
likely to be in the public-house than any other member of the public. There is
nothing to show how soon after the hanging of the chandelier anyone might
be expected or permitted to enter the room in which it was. The facts stated
do not bring it within the rule. There is an American case! Thomas and Wife
(l) cited in Mr. Horace Smith's Treatise on the Law of Negligence, p. 88. note
(t}, which goes a very long way. I doubt whether it does not go too far. In
Longmeid, (2), a lamp was sold to the plaintiff to be used by wife. The Jury
were not satisfied that the defendant knew of the defect in the lamp if he did

131
there was fraud; if he did not, there seems to have been no evidence of
negligence. If he did not, there seems to have been not within the rule. If
there was no fraud, the case was not brought by other circumstances within
the rule. In Gautret v. Egerton (3) the declaration was held by Willes. J., to be
had on demurrer, because it did not show that the defendant had any reason
to suppose that persons going to the docks would not have ample means of
seeing the holes and cuttings relied on. He does not say there must be fraud
in order to support the action. He says there must be to do something like
fraud. He says, "Every man is bound, not, willfully to deceive others. And
then in the alternative, he says: "or to do any act which may place them in
danger." There seems to be no conflict with the rule above deduced from
well admitted cases. I am, therefore of opinion that it is a good, safe, and just
rule. I cannot conceive that if the facts were proved which would make out
the proposition I have enunciated, the law can be that there would be no
liability. Unless that be true, the proposition must be true. If it be the rule the
present case is dearly within it. This case is also, 1 agree, within that which
seems to me to be a minor proposition - namely, the proposition which has
been often acted upon, that there was in a sense, an invitation of the plaintiff
by the defendant, to use stage. The appeal must, in my opinion, be allowed,
and judgment must be entered for the plaintiff.

Cotton, L.J. Bowen, L.J. concurs in the judgment I am about to read

In this case the defendant was the owner of a dock for the repair of ships,
and provided for use in the dock the stages necessary to enable the outside
of the ship to be painted while the dock, and the stages which were to be
used on1y in the dock were appliances provided by the dock owner as
appurtenant to the dock and its use. After the stage was handed over to the
shipowner it no longer remained under the control of the dock owner. But
when ships were received into the dock for repair and provided with stages
for the work on the ships which was to be executed there all those who come

132
to the vessels for the purpose of painting and otherwise repairing them were
there for business in which the dock owner was interested and they in my
opinion must be considered as invited by the
dock owner to use the deck and all appliances provided by the dock owner as
incident to the use of the dock. To these persons, in may opinion, the dock
owner was under an obligation to take reasonable care that at the time the
appliances provided for immediate use in the dock were provided by him
they were in a fit state to be used that is, in such a state as not to expose
these who might use them for the repair of the ship to any danger or risk not
necessarily incident to the service in which they are employed. That this
obligation exists as regards articles of which the control remains with the
dock owner was decided in Indermaur v. Damos (1), and in Smith v. London
and St. Katharine Docks Co. (2) the same principle was acted on. I them that
the same duty must exist as to things supplied by the dock owner for
immediate use in the dock, of which the control is not retained by the
dockowner, to extent of using reasonable care as to the state of the articles
when delivered by him to the ship under repair for immediate use, in relation
to the repairs. For any neglect of those having control of the ship and the
appliances he would not be liable, and to establish his liability it must be
proved that the defect which caused the accident existed at the time when
the article was supplied by the dockowner.

Blackmere v, Bristol and Exeter By Co. (3), may be relied on as at variance

with the opinion thus expressed by me, but I think that the objection is not
well founded. If the plaintiff is to be considered as a volunteer there would be
no implied request or invitation to him by the defendant to use the dock and
the app1iances provided. But he was there for the purpose of work for the
due execution of which the defendant receive the ship into his dock, and the
defendant received payment as remuneration, for allowing the work to be
done in his dock, and for providing the necessary appliances for enabling it
to be done. The plaintiff has therefore engaged in work in the performance

133
of which the defendant was interested and he cannot be looked upon in the
light of a volunteer. Whether the Court was right in Blackmers Case (1) in
treating the plaintiff as a volunteer may be a question. But as the group of
the decision is that he was so, that circumstance prevents the case being an
authority in consistent in principle with the conclusion at which I have
arrived.

He decides this appeal in favour to the plaintiff, and I am unwilling to concur

with the Master of the Rolls in laying down unnecessarily the larger principle
which he entertains, in as much as there are many cases in which the
principle was impliedly negative. Take for instance the case of Langridge v.
Levy (2), to which the principle if it existed would have applied. But the
judges who decided that case based their judgment on the Fraudulent
representation made to the father of the plaintiff to judges have treated
fraud as the ground of the decision, as was done by Coleridge, J., in
Blackmore v. Bristol and Exeter Ry. Co.(1); and in Collis v. Selen (3) Willes, J.,
says that the judgment in Langridge v. Levy (2), was based on the fraud of
the defendant. This impliedly negative the existence of the large general
principle which is relied on, and the decisions in Collis v. Selden (3), and in
Longmeid v. Holliday (4) (in each of which the plaintiff failed) are in my
opinion at variance with the principle contended for, The case of George v.
Skivington (5), and especially what is said by Cleasby, B., in giving judgment
in that case seem to support the existence of the General principle. But it is
not in terms laid down that any such principle exists, and that case was
decided by Cleasby, B., on the ground that the negligence of the defendant
which was his own personal negligence was equivalent, for the purpose of
that action, to fraud on which (as he said) the decision in Langridge v. Levy
(1) was based.

In declining to concur in laying down the principle enunciated by the Master

of the Rolls, I in no way intimate any doubt as to the principle that anyone

134
who leaves a dangerous instrument, as a gun, in such a way as cause
danger, or who without due warning supp1ied to others for use an
instrument or thing which to his knowledge, from its construction or
otherwise. is in such a condition as to cause danger, not necessarily incident
to the use of such an instrument of thing, is liable for injury caused to others
by reason of his negligent act.

For the reasons stated I agree that the. plaintiff is entitled to judgment,
though I do not entirely concur with the reasoning of the Master of the Rolls.
Judgment reversed.

135
 E) DERRY AND ORS. V. PEEK (House of Lords), 1889 14 App. Case
337

By a special Act 45 & 46 vict., Clix, the Plymouth, Devonport and District
Tramways Company was authorized to make_ certain tranways.

By s. 35 the carnages used on the transways might be moved be animal

power and, with the consent of the Board of Trade, by steam or any
mechanical power for fixed periods and subject to the regulations of the
Board.

By s. 34 of the Tranways Act, 1870 (33 & 34 Vict., c.78), which section was
incorporated in the special Act, all carrianges used on any tranway shall be
moved by the power prescribed by the special Act, and where no such power
is prescribed, by animal power only".

In February 1883 the appellants as directors of the company issued a

prospectus containing the following paragraph:

"On great feature of this undertaking, to which considerable importance

should be attached, is, that by the special Act of Parliament obtained, the
company has the right to use steam or mechanical motive power, instead of
horses, and it is fully expected that by means of this a considerable saving
will result in the working expenses of the line as compared with other
tranways worked by horses.

Soon after the issue of the prospectus the respondent, relying as he alleged
upon the representations in this paragraph and believing that the company

136
had an absolute right to use steam and other mechanical power, applied for
and obtained shares in the company .

The company proceeded to tranways, but the Board of Trade refused to

consent to the use of steam or mechanical power except on certain portions
of the tranways.

In the result the company was wound up, and the respondent in 1885
brought an action of deceit against the appellants claiming damages for the
fraudulent misrepresentations of the defendants whereby the plaintiff was
induced to take shares in the company.

Stirling J. dismissed the action; but that decision was reversed by the Court
of Appeal (Cotton L.J., Sir J. Hannen, and Lopos, L.J.) held that the defendants
were liable to make good to the plaintiff the loss sustained by his taking the
shares and ordered an inquiry Against this decision the defendants appealed.

On appeal the House of Lords restored the first judgment in an action of

deceit, the House held, the plaintiff must prove actual fraud, that is: a false
representation made knowingly or without belief in its truth, or recklessly
without carling whether it be true or false and intending the plaintiff to act
upon it. A false statement, carelessly made without a reasonable group for
believing it to be true, may be evidence of fraud, but does not necessarily
amount to fraud. Such a statement, if made in the honest belief that it is
true, is not fraudulent and does not render the person making it liable to an
action of deceit.

Lord Herschell said...In my opinion making a false statement through want of

care falls far short of, and is a very different thing from fraud, and the same
may be said of a false representation honestly believed though on
insufficient grounds. Indeed Cotton L.J. himself indicated, in the words I have

137
already quoted, that he should not call it fraud. But the whole current of
authorities, with which I have so long detained your Lordships, shews to my
mind conclusively that fraud is essential to find an action of deceit, and that
it cannot be maintained where the acts proved cannot properly be so
termed.

(Lord Halsbury L.C., Lord Watson, Lord Bramwell and Lord Fitzgerald
delivered concurring judgments.)

Order of Court of Appeal reversed, Appeal allowed.

138
(F) LE LIEVRE AND DENNES v. GOULD. (1893) 1QB 491

LORD ESHER, M.R. In my opinion decision of the Divisional Court was right. It
is said that a relation by contract existed between the plaintiff Dennes and
the defendant, and that one of the implied terms of that contract was that
defendant in giving the certificate should use reasonable care to ascertain
the truth of the facts to which he certified. There can be no doubt that, if
there was a contract between the plaintiff Dennes and the defendant, and in
truth there was no such contract. The contract with the defendant was made
by Hunt, the vendor of the land comprise in the building agreement; On
Russeli, who actually made the contract, had the authority of Hunt, and of no
one else, to make it on behalf of Hunt, not on behalf of Dennes. At that time
Dennes was not the mortgagee of the property; he had no relation whatever
to the. It istrue that he had talked about advancing money to Lovering (the
builder ), but he had not then done so, and he stood in no relation, legal or
equitable, to the matter. How could he be at that time an undisclosed
principal Hunt? He was not a principal at all, and certainly not an undisclosed
principal.

Then it is said that, even if there was no contract between the plaintiff
Dennes and the defendant, nevertheless the ,defendant is liable to the
plaintiffs for having given certificates which contained untrue statements;
for, it is said, the defendant owed a duty to the plaintiffs to exercise care in
giving the certificates, because he knew that the plaintiffs would or might act
upon them by advancing money to Lovering. No doubt the defendant did
give untrue certificates; it was negligent on his part to do so, and it may
even be called gross negligence. But can the plaintiffs rely upon negligence

139
in the absence of fraud? The question of liability for negligence cannot arise
at all until it is established that the man who has been negligent owed some
duty to the person who seeks to make him liable for his negligence. What
duty is there when there is no relation between the parties by contract? A
man is entitled to be as negligent as he pleases towards the whole world if
he owes no duty to them. The case of Heaven v. Pender (1) has not bearing
upon the present question. That case established that, under certain
circumstances, one man may owe a duty to another, even though there is no
contract between them. If one man is near to another, or is near to the
property of another, a duty lies upon him not to do that which may cause a
personal injury to that other, or may injure his property. For instance, if a
man is driving along a road, it is his duty not to do that which may injure
another person whom he meets on the road. or to his horse or his carriage.
In the same way it is the duty of a man not to do that which will injure the
house of another to which he is near. If a man is driving on Salisbury Plain,
and no other person is near him, he is at liberty to drive as fast and as
recklessly as he pleases. But if he sees another carriage coming near to him,
immediately a duty arises not to drive in such a way as is likely to cause an
injury to that other carriage. So, too, if a man is driving along a street in a
town, a similar duty not to drive carelessly arises out of contiguity or
neighborhoods. That is the effect of the decision in Heaven v. Pender (1), but
it has no application to the present case. This was pointed out by Romer, J.,
.in Scholes v. Brook (2), though it was hardly necessary to do so, No doubt, if
Cann v. Willson (3) stood as good law, it would cover the present case. But I
do not hesitate to say that Cann v. Willson. (3) is not now law. Chitt., J., in
deciding that case, acted upon an erroneous proposition of law, which has
been since overruled by the House of Lords in Derry v. Peek (4), when they
restated the old law that, in the absence of contract, an action for negligence
cannot be maintained when there is no fraud. If that, were not so, then, in a
case in which an action is brought against directors of a company for
misrepresentations contained in a prospectus, it would never be necessary to

140
prove that they had been guilty of fraud. But that was never so held, and
there is a long line of cases which shew that in such an action it is essential
for the plaintiff to prove fraud. The Court of Appeal, by their decision in Peek
v. Derry (1), appeared to have overthrown an those cases. They seemed to
nave thought that there was a distinction between fraud in a Court of Equity
and fraud at Common Law. There is no such distinction. A charge of fraud is
such a terrible thing to bring against a man that it cannot be maintained in
any Court unless it is shewn that he had a wicked mind. That is the effect of
Derry v. Peek. (2) What is meant by a wicked mind? If a man tells a wilful
falsehood, with the intention that it shall be acted upon by the person to
whom he tells it, his mind is plainly wicked, and he must be said to be acting
fraudulently. Again, a man must also be said to have a fraudulent mind if he
recklessly makes a statement intending it to be acted upon, and not caring
whether it be true or false. I do not hesitate to say that a man who thus acts
must have a wicked mind. But negligence.however great, does not of itself
constitute fraud. The official referee who tried this case and heard the
evidence came to the conclusion that the defendant, though he had acted
negligently, had not willfully made any false statement, .or been guilty of any
fraud. .All that he had done was to give untrue certificates negligently. Such
negligence, in the absence of contract with the plaintiffs, can give no right of
action at law or in equity. All the grounds urged on behalf of the plaintiffs fail,
and the appeal must be dismissed.

Bowen, L. J. I am of the same opinion

With regard to the first point, I think it unnecessary to add anything to what
has been said by my lord. I will merely say that the plaintiffs' counsel cannot
point to a scintilla of evidence that the defendant in giving the certificate
was acting as the plaintiffs surveyor He was the surveyor of another person -
Hunt. There was no contractual relation between the plaintiffs and the

141
defendant, and upon that point, therefore, we must decide against the
plaintiffs.

I will take the third point next, that is, the point as to fraud. The official
referee has found that there was no fraud, that is, that there was no fraud in
the sense in which the law. understand it. - in other words, that the conduct
of the defendant was not dishonest; although it may have led to
misconception and mistaken action on the part of the plaintiffs, still it was
not dishonest conduct. It is impossible that after that finding we should allow,
the case to be tried again on the question of fraud, unless there had been
something in the nature of surprise or miscarriage. There was nothing of that
kind.

The last point is mat which was raised upon Cann v. Willson. (1) It was
argued that, although the defendant may not have been dishonest,
nevertheless he was grossly negligent, and in a way which, at the end of the
chain of cause and effect, caused damage to the plaintiffs, although the
defendant was not their surveyor. The defendant as surveyor owed a duty to
his employer to be careful in giving his certificates; but did he owe any duty
to the plaintiffs? None certainly which arose out of contract.
But it is said that he must or ought to have known that his certificates would
or might probably be used for the instruction of the plaintiffs, and that the
plaintiffs would be guided by them as to advancing their money.

That duty, if it existed, would be a duty towards the plaintiffs directly, quite
apart from and independent of the duty which the defendant owed to his
own employer. Cann v, Willson.(1) has been relied on as proving that such a
duty existed, and in that point of view it is necessary for me to refer to Derry
v, Peek (2), which I thin has overruled Cann v, Wilson (1). Derry v. Peek. (2)
decided I\VO things. It decided, first, that a plaintiff cannot succeed in an
action of deceit or fraud without proving that the defendant was fraudulent.

142
That any doubt should ever have been cast upon that proposition seems to
me strange, for it has certainly been an accepted proposition ever since I
have, I believe, ever since my lord has, been in the profession. There must
be fraud in order to found an action of fraud. There are two reasons, I think,
why there has been some confusion in the minds of some people with regard
to that almost elementary proposition The first is the
fact that equity judges had to decide questions of law and fact together. An
equity judge, when he had to deal with a question of fraud , discussed his
reasons for coming to the conclusion that there had been fraud, and it very
often happened that an equity judge decided that there was fraud in a case
in which gross negligence had been prove. If the case had been tried with a
jury the judge would have pointed out to them that gross negligence might
amount to evidence of fraud if it were so gross as to be incompatible with the
idea, of honesty, but that even gross negligence, in the absence of
dishonesty, did not of itself amount to fraud. Cases of gross negligence, in
which the Chancery judges decided that there had been fraud, were piled up
one upon another, until at last a notion came to be entertained that it was
sufficient to prove gross negligence in order to establish fraud. That is not so.
In all those cases fraud and dishonesty were the proper ratio decidendi and
gross negligence in order was only one of the element which the judge had
to consider in making up his mind whether the defendant's conduct had been
dishonest. There was, as it seems to me, also misapprehension, on the part
of those who were not so conversant with nisi prius actions at common law
as with other branches of the English law, with regard to the direction which
was always given to a jury. The direction always given was this: the jury were
told that, before they found a verdict against a man who was charged with
fraudulent misrepresentation, they must be satisfied either that he had
stated what was untrue, knowing that it was untrue, and intending that the
untruth should be acted upon, in which case - a wilful lie being a wicked
thing he was necessarily dishonest, or, at any rate, they must be satisfied
that,

143
if he did not know that the statement was untrue, he made it deliberately
intending that it should be acted upon, and not knowing and not caring
whether it was true or false. If a man makes a willful statement, intending it
to be acted upon, and he is reckless whether it is true or false, he has a
wicked mind; but his mind is wicked, not because he is negligent, but
because he us dishonest in not caring about the truth of his statement

In the first case, it is the knowledge of the falsehood, in the second, it is the
wicked indifference, which constitute the fraud. There seems to have been
some sort of an idea that, when a jury was asked the second question,
whether the man has made the representation not knowing and not caring
whether his statement was true or false, the expression not caring had
something to do with his not taking care. But that expression did not mean
not taking care to find out whether the statement was true or false; it meant
not caring in the mans own heart and conscience whether it was true or
false, and that would be wicked indifference and recklessness. Now in Derry
v. Peek (1) the House of Lords pointed out that as common law lawyers had
always held, an action of deceit must be based upon fraud, and that
negligence is not of itself fraud, although negligence is some cases may be
of such a kind as to make it highly probable that there has been fraud Then
Derry v. Peek (1) decided this further point- viz., that in cases like the
present (of which Derry v. Peek (1) was itself an instance) there is no duty
enforceable in law to be careful. Negligent misrepresentation does not
amount to deceit, and negligent misrepresentation can give rise to a cause
of action only if a duty lies upon the defendant not to be negligent, and in
that class of cases, of which Derry v. Peek (1) was one, the House of Lords
considered that the circumstances raised no such duty. Is there any such
duty in the present case, for deceit it out of the question after the finding of
the official referee? If there were no such duty, there can be no breach of
duty by negligence. The plaintiffs counsel have involved the authority of

144
Cann v. Willson (2), with the view of persuading us that there is such a duty. I
am not now considering whether the law of England might not be stricter
than it is; I can imagine a state of law by which a duty would be imposed
upon a person under similar circumstances. We, however, have to consider
no what the law might be but what it is. Is there any duty known to the law in
such a case as the present? It is said that Heaven v. Pender (1) and cases of
that class, shew that the defendant had a duty to the plaintiffs. It is idle to
refer to cases which were decided under totally different aspects, and upon
totally different considerations of the law.

Take, for example, the case of an owner of a chattel, such as a horse a gun,
or a carriage, or any other instrument, which is in itself of such a character
that, if it be used carelessly, it may injure some third person who is near to it;
then it is as plain as daylight that the owner of that chattel, who is
responsible for its management, is bound to be careful how he uses it.
Exactly in the same way with regard to the owner of premises. If the owner
of premises knows that his premises are in a dangerous condition, and that
people are coming there to work upon them by his own permission and
invitation, of course he must take reasonable care that those premises do
not injure those who are cowing there. It is because he has the conduct and
control of premises which may injure persons whom he knows are going to
use them, and who have a right to do so, that he is bound to take care to
protect those persons who will, thus be brought into connection with him.
Heaven. v. Pender (1) was an instance of this class of cases. How has it any
application to the present case? Only, I suppose, on the suggestion that a
man is responsible for what he states in a certificate to any person to whom
he may have reason to suppose that the certificate may be shown. But the
law of England does not go to that extent: it does not consider that what a
men writes, on paper is like a gun or other dangerous instrument, and,
unless he intended to deceive, the law does not, in the absence of contract,
hold him responsible for drawing his certificate carelessly. In Cann v.Willson

145
(2) owing to a misapprehension of the doctrine of Heaven v. Pender (1), it
was decided that there was such a duty; but when a similar case came
before Romer, J., in Scholes v. Brook (3), that learned judge, whose attention
was then directed to the true view of Derry v. Peek (4), as explained in Angus
v. Cliford (5). said: "Cases have been cited which, it is said, establish such a
liability. But apart from Cann v. Wilson. (l), it appears to me that the
authorities may be divided into two classes. One of those classes. is when
one person invites another to come upon his premises, in which case the
person giving the invitation must use reasonable care to ensure that the
condition of the premises does not subject the person invited to danger.
Another class is, where a person becomes liable for using or leaving about in
such a way as to cause danger, an instrument which is dangerous in itself.
Beyond those two classes, I am not aware for the moment of any
circumstances under which a person can be held liable in a case such as that
which has been argued before me. But the present case falls within neither
of those two classes. An invitation to advance money or take shares on a
valuation, or on a prospectus, does not, I think. come within the first class,
nor can a valuation or a prospectus be considered a dangerous instrument
within the meaning of that term as used above by me; and, that being so, I
think, that, if the plaintiff had not established a contract, this action must
have failed, unless I followed Cann v. Willson (1); but with reference to that
case, after the speeches of the learned lords in Derry v. Peek (2). I find a
difficulty in following it, and I think the case would not have been decided as
it was, after the judgment of the House of Lords, which by implication,
negatives the existence of any such general rule as laid down in Cann v.
Willson (1) It is obvious that Romer, J., there put aside the case of Heaven v.
Pender (3) exactly in the same way as my Lord has put it aside and as I
following him, have endeavoured to do.

I should not have said so much, had it not been for the reappearance to
some extent in this case of the old misapprehension of the effect of the

146
decision in Derry v. Peek (2), for I have myself stated, until I am almost tired
of doing so, and I have no doubt that other judges are equally tired at,
exactly what Derry v. Peek (2) did decide and did not decide. I elaborated the
same point at great length in Angus v. Cliford (4), and in Low v. Bouverie (5)

A.L. Smith, L.J. We cannot decide this cases against the plaintiffs without
overruling Cann v. Willson. (l) In my opinion the defendant is right in saving
as he does in his statement of defence, that he owed no duty to the
plaintiffs, unless they could shew, which they cannot, that he entered into a
contract with them to give the certificates. It is said that Heaven v. Pender
(2) shows that the defendant owed a duty to the plaintiffs, but that case has,
in my judgment, no application to such a case as the present. The decision of
Heaven v. Pender (2) was founded upon the principle, that a duty to take due
care did arise when the person or property of one was in such proximity to
the person or property of another that, if due care was not taken, damage
might be done by the one to the other. Heaven v. Pender (2) goes no further
than this, though it is often cited to support all kinds of untenable
propositions. That case is a totally different one from the present, and its
principle cannot be applied to it. There is no duty in this case arising from the
defendant to the plaintiffs, unless contract, and no contract between the
plaintiffs and the defendant has been proved. and, consequently, no breach
of duty on the part of the defendant has been established of which the
plaintiffs can complain. But it is said that the defendant has negligently
made an untrue representation by which the plaintiffs have been injured, and
reliance is placed on. Cann v. Willison (1) That case was decided by Chitty, J.,
after the decision of the Court of Appeal in Peek v. Derry (3), and before that
decision had been reversed by the House of Lords in Derry v. Peek (4); a.f1d
Chitty, J" quoted from the judgment of Cotton, L.J., in Peek v. Derry (3), in the
Court of Appeal, and he based his judgment (l.) on the ground that the
defendant owed a duty to the plaintiffs irrespective of contract, and (2.) on
the ground that the defendant had recklessly, though without a fraudulent

147
intention, made a representation which was untrue, with the intention that
the plaintiffs should act upon it. In my opinion, the decision in Cann v.
Willson (1) cannot be upheld, and I think that Romer, J., in Scholes v. Brook
(5) was right in so treating it. In my judgment, the Divisional Court in the
present case took the true view of the law.

Appeal dismissed

Solicitors: Todd, Dennes, & Lamb: Woodcock, Ryland, & Parker, for Ffinch &
Chanter, Barnstaple.

W.L.C

148
(G) NOCTON v. LORD ASHBURTION (House of Lords)1914 A.C. 932

This was an appeal and a cross-appeal from an order of the Court of Appeal
which had reversed a judgment given in the Chancery Division.

Lord Ashburton claimed damages from Nocton a solicitor, on the ground that
he had suffered loss as a result of improper advice which he had been given
by Nocton and had been induced to act upon by him. The advice had been
that Lord Ashburton should release a part of a mortgaged security. As a
result of acting on that advice the security had become insufficient and Lord
Ashburton claimed that the advice had been given by
Nocton well knowing that the security would be rendered insufficient and
that it had been given in Noctons interests and not in his clients interest .

At first instance the court found that there had been no fraud and dismissed
the action. The Court of Appeal reversed that finding and granted relief on
the ground that Nocton had been quilts of actual fraud.

The House of Lords held that the Court of Appeal had been wrong in
reversing the finding of fact of the trial judge. Their Lordships went on,
however, to hold that the plaintiff had been entitled to succeed even in the
absence of actual fraud on the basis that the defendant had committed a
breach of duty arising out of his fiduciary relationship with the plaintiff and as
a result of that breach the plaintiff had suffered loss.

The decision of the Court of Appeal was; therefore, affirmed but on different
grounds.

149
Viscount Haldane L.C.: Derry v. Peek which establishes that proof of a
fraudulent intention is necessary to sustain an action of deceit whether the
claim is dealt with by a Court of Law or by a Court of Equity in the exercise of
its concurrent jurisdiction, does not narrow the scope of the remedy in
actions within the exclusive jurisdiction of a Court of Equity, which, though
classed under the head of fraud, do not necessarily involve the existence of a
fraudulent intention as, for example, an action for indemnity for loss arising
from a misrepresentation made in breach of a special duty imposed by the
court by reason of the relationship of the parties.

Although liability for negligence in word has in material respects been

developed in our law differently from liability for negligence in act, it is none
the less true that a man may come under a special duty to exercise care in
giving information or advice I should accordingly be sorry to be thought to
lend countenance to the idea that recent decisions have been intended to
stereotype the cases in which people can be held to have assumed such a
special duty. Whether such a duty has been assumed must depend on the
relationship of the parties, and it is at least certain that there are a good
many cases in which that relationship may be properly treated as giving rise
to a special duty of care in statement.
Lord Herschell said In my opinion making a false statement through want
of care falls far short of, and is a very different thing from fraud, and the
same may be said of a false representation honestly believed though on
insufficient grounds. Indeed Cotton L.J. himself indicated, in the words I have
already quoted, that he should not call it fraud. But the whole current of
authorities, with which I have so long detained your Lordships, shews to my
mind conclusively that fraud is essential to find an action of deceit, and that
it cannot be maintained where the acts proved cannot properly be so
termed

150
(Lord Halsbury L.C., Lord Watson, Lord Bramwell and Lord Fitzgerald
delivered concurring judgments.}

Order of Court of Appeal reversed, Appeal allowed.

151
 MALISTER (or DONOGHUE) Pauper) v. STEVENSON
House of Lords, 1932 (1932) A.C. 562.

This was an appeal from an inter1ocutor of the Second Division of the Court
of Session. in Scotland recalling an interlocutor of the Lord Ordinary Lord
Moncrieff.

The appellant, a shop assistant, sought to recover from the respondent, an

aerated water manufacturer, on the ground of his alleged negligence 500
as damages for the injurious effects alleged to have been produced on her
by the presence of a snail in a bottle of ginger beer manufactured by the
respondent and ordered for the appellant in a shop in Paisley by a friend of
the appellant. In consequence of her having drunk part of the contaminated
contents of the bottle the appellant alleged that she contracted a serious
illness. The bottle was stated to have dark apaque glass , so that the
condition of its contents could not be ascertained by inspection, and to have
been closed with a metal cap, while on the side was label bearing the name
of the respondent.

The Lord Ordinary rejected the respondents plea in law that the appellants
averments were irrelevant and insufficient to support the conclusions of the
summons and allowed a proof. The second Division by a majority (the Lord

152
Justice- Clerk, Lord ormidale and Lord Anderson; Lord Hunter dissenting),
recalled the interlocutor of the Lord Ordinary and dismissed the action.

Lord Atkin: The sole question for determination in this case is legal: Do the
averments made by the pursuer in her pleading if true, disclose a cause of
action? I need not restate the Particular facts. The question is whether the
manufacturer of an article of drink sold by him to a distributor in
circumstances which prevent the distributor or the ultimate
purchaser or consumer from discovering by inspection any defect is under
any legal duty to the ultimate purchaser or consumer to take reasonable care
that the article is free from defect likely to cause injury to health. I do not
think a more important problem has occupied your Lordships in your judicial
capacity, important both because of its bearing on public health and because
of the practical test which it applies to the system under which it arises. The
case has to be determined in accordance with Scotes law, but it has been a
matter of agreement between the experienced counsel who argued this
case, and it appears to be the basis of the judgments of the learned judges
of the Court of Session, that for the purposes of determining this problem the
law of Scotland and the law of England are the same ... The law of both
countries appears to be that in order to support an action for damages for
negligence the complaint has to show that he has been injured by the breach
of a duty owed to him in the circumstances by the defendant to take
reasonable care to avoid such injury. In the present case we are not
concerned with the breach of the duty; if a duty exists, that would be a
question of fact which is sufficiently averred and for the present purpose
must be assumed. We are solely concerned With the question whether as a
matter of law in the circumstances alleged the defender owed any duty to
the pursuer to take care.

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There will no doubt arise cases where it will be difficult to determine whether
the contemplated relationship is so close that the duty arises, But in the
class of case now before the court I cannot conceive any difficulty to rise. A
manufacture puts up an article of food in a container which he knows will be
opened by the actual consumer. There can be no inspection by any
purchaser and no reasonable preliminary inspection by the consumer,
Negligently in the course of preparation he allows the contents to mixed with
poison. It is said that the law of England and Scotland is that the poisoned
consumer has no remedy against the negligent manufacturer. My Lords, if
this were the result of the authorities, I should consider the result a grave
defect in the law and so contrary to principle that I should hesitate long
before following any decision to that effect which had not the authority of
this House. I would point out that in the assumed state of the authorities not
only would the consumer have no remedy against the manufacturer he
would have none against anyone else, for in the circumstances alleged there
would be no evidence of negligence against anyone other than the
manufacturer, and except in the case of a consumer who was also a
purchaser no contract and no warranty of fitness, and in the case of the
purchase of a specific article under its patent or trade name, which might
well be the case in the purchase of some article of food or drink, no warranty
protecting even the purchaser- consumer. There are other instances than of
articles of food and drink where goods are sold internded to be used
immediately by the consumer, such as many forms of goods sold for
cleaning purposes , where the same liability must exist. The doctrine
supported by the decision below would not only deny a remedy to the
consumer who was injured by consuming bottled bear or chocolates
poisoned by the negligence of the
.
manufacturer, but also the user of what should ,be a harmless proprietary
medicine, an ointment, a soap, a cleaning fluid or cleaning power. I confine
myself to artic1es of common household use, where everyone, including the

154
manufacturer, knows that the articles will be used by persons other than the
actual ultimate purchaser namely, by members of his family and his
servants, and, in some cases, his guests. My Lords, I do not think so ill of our
jurisprudence as to suppose that its principles are so remote from the
ordinary needs of civilized society and the ordinary claims which it makes
upon its members as to deny a legal remedy where there is so obviously a
social wrong.

(After carefully examining the previous cases he concluded): My :Lords, if

your Lordships accept the view that the appellant's pleading discloses a
relevant cases of action, you will be affirming the proposition that by Scots
and English law alike a manufacturer of products which he sells in such a
form as to show that he intends them to reach the ultimate consumer in the
form in which they left him, with no reasonable possibility of intermediate
examination and with the acknowledge that the absence of reasonable
care in the preparation or putting up of the products will result in injury to
the consumer's life or property, owes a duty to the consumer to take that
reasonable care. It is a proposition that I venture to say no one in Scotland or
England who was not a lawyer would for one moment doubt. It will be an
advantage to make it clear that the law in this matter as in most others, is in
accordance with sound common sense. I think that this appeal should be
allowed.
Lord Macmillan: The law takes no cognizance of carelessness in the
abstract. It concems itself with carelessness only where there is a duty to
take care and where failure in that duty has caused damage. In such
circumstances carelessness assumes the legal quality of negligence and
entails the consequences in law of negligence. What then are the
circumstances which give rise to this duty to take care? In the daily contracts
of social and business like human being are thrown into or place themselves
in an infinite variety of relationships with their fellows, and the law can refer
only to the standards of the reasonable man in order to determine whether

155
any particular relation gives rise to a duty to take care as between those who
stand in that relation to each other. The grounds of action may be as various
and manifold as human errancy, and the conception of legal responsibility
may develop in adaptation to altering social conditions and standards. The
criterion of judgment must adjust and adapt itself to the changing
circumstances of life. The categories of negligence are never closed. The
cardinal principle of 1iability is that the party complained of should owe the
party complaining a duty to take care and that the paty complaining should
be able to prove that he has suffered damage in consequence of a breach of
that duty. Where there is room for diversity of view it is in determining what
circumstances will establish such a relationship between the parties as to
give rise on the one side to a duty to take care and on the other side to a
right to have care taken.

To descend from these generalities to the circumstances of the present case,

I do not think that any reasonable man or any twelve reasonable men would
hesitate to hold that if the appellant establishes her allegations the
respondent has exhibited carelessness in the conduct of his business. For a
manufacturer of aerated water to store his empty bottles in a place where
snails can get access to them and to fill his empty bottles without taking any
adequate precautions by inspection or otherwise to ensure that they contain
no deleterious foreign matter may reasonably be characterized as
carelessness without applying too exacting a standard. But as I have pointed
out, it is not enough to prove the respondent to be careless in his process of
manufacture. The question is, does he owe a duty to take care, and to whom
does he owe that duty? Now I have no hesitation in affirming that a person
who for gain engages in the business of manufacturing articles of food and
drink intended for consumption by members of the public in the form in
which he issues them is under a duty to take care in the manufacture of
these articles. That duty, in my opinion, he owes to those who he intends to
consume his products. He manufactures his commodities for human

156
consumption he intends and contemplates that they shall be consumed. By
reasons of that very fact he places himself in a relationship with all the
potential consumers of his commodities and that relationship which he
assumes and desires for his own ends imposes upon him a duty to take care
to avoid injuring them. He owes them a duty not to convert by his own
carelessness an article which he issues to them as wholesome and innocent
into an article which is dangerous to life and health. It is sometimes said that
liability can arise only where a reasonable man would have foreseen and
could have avoided the consequences of his act or omission. In the present
case the respondent, when he manufactured his ginger beer, had directly in
contemplation that it would be consumed by members of the public; can it
be said that he could not be expected as a reasonable man to foresee that if
he conducted his process of manufacture carelessly he might injure those
whom he expected and desired to consume his ginger beer? The possibility
of injury so arising seems to me in no sense remote as to excuse him from
foreseeing it. Suppose that a baker through carelessness allows a large
quantity of arsenic to be mixed with a batch of his bread, with the result that
those who subsequently eat it are poisoned, could he be heard to say that he
owed no duty to the consumers of his bread to take care that it was free from
poison, and that, as he did not know that any poison had got into it, his only
liability was for breach of warranty under his contract of sale to those who
actually bought the poisoned bread from him? Observe that I have said
"through carelessness" and thus excluded the case of a pure accident such
as may happen where every care is taken. I cannot believe, and a I not
believe, that neither in the law of England nor in the law of Scotland is there
redress for such a case. The state of facts I have figured might well give rise
to a criminal change, and the civil consequences of such carelessness can
scarcely be less wide than its criminal consequences. Yet the principle of the
decision appealed from is that the manufacturer of food products intended
by him for human consumption does not owe to the consumers whom he has

157
in view any duty of care, not even the duty to take care that he does not
poison them ...

It must always be a question of circumstances whether the carelessness

amounts to negligence and whether the injury is not too remote from the
carelessness I can readily conceive that where a manufacturer has parted
with his product and it has passed and into other hands it may well be
exposed to vicissitudes which may render it defective or noxious and for
which the manufacturer could not in any view be held to be to blame. It may
be a good general rule to regard responsibility as ceasing when control
ceases. So, also, where between the manufacturer and the user there is
interposed a party who has the means and opportunity of examining the
manufacturer's product before he reissues it to the actual user. But where, as
in the present case, the article of consumption is so prepared as to be
intended to reach the consumer in the condition in which it leaves the
manufacturer, and the manufacturer takes steps to ensure this by sealing or
otherwise closing the container so that the contents cannot be tempered
with. I regard his control as remaining effective until the article reaches the
consumer and the container is opened by him. The intervention of any
exterior agency is intended to be excluded, and was in fact the present case
excluded ....

Lord Buckmaster: ... in my view, therefore, the authorities are against the
appellant's contention, and, apart from authority, it is difficult to see how any
common law proposition can be formulated to support her claim.

The principle contended for must be this: that the manufacturer, or indeed
the repairer, of any article. apart entirely from contract, owes a duty to any
person by whom the article is lawfully used to see that it has been carefully
constructed. All rights in contract must be excluded from consideration of
this principle; such contractual rights as may exist in successive steps from

158
the original manufacturer down to the ultimate purchaser are ex hypothesis
immaterial. Nor can the doctrine be confined to cases where inspection is
difficult or impossible to introduce. This conception is simple to misapply to
tort doctrines applicable to sale and purchase.

The principle of tort lies completely outside the region where such
considerations apply and the duty, if it exists, must extend to every person
who, in lawful circumstances, uses the article made. There can be no special
duty attaching to the manufacture of food apart from that implied by
contract or imposed by statute. If such a duty exists, it seems to me it must
cover the construction of every article, and I cannot see an reason why it
should not apply to the construction of a house. If one step, why not fifty? Yet
if a house be, as it sometimes is, negligently built, and in consequence of
that negligence the celling falls; and injures the occupier or anyone else, no
action against the builder exists according to the English law, although I
believe such a right did exist according to the laws of Babylon. Were such a
principle known and recognized, it seems to me impossible having regard to
the numerous cases that must have arisen to person injured by its disregard,
that with the exception of George v. Skivington, no case directly. involving
the principle has ever succeeded in the courts, and, were it well known and
accepted, much of the discussion of the earlier cases would have been
waste of time, and the distinction as to articles dangerous in themselves or
known to be dangerous to the vendor would be meaningless.

In Mullen v. Barr & Co., a case indistinguishable from the present excepting
upon the ground that a mouse is not a snail, and necessarily adopted by the
Second Division in their judgment, Lord Anderson says this:

"In a case like the present, where the goods of the defenders are widely
distributed throughout Scotland, it would seem little short of outrageous to

159
make them responsible to members of the public for the condition of the
contents of every bottle which issues from their works.

(I) FARR v. BUTTERS BROS. AND COMPANY

Court of Appeal, (1932) 2 K.B.68

SCRUTTON L.J.: This case is of considerably interest, because, between the

date of the judgment given by McCardie J. and the hearing of this appeal, the
House of Lords has delivered a very important judgment in MAlister v.
Stevenson. I do not propose to deliver a complete judgment on the effect of

160
that decision; all I shall deal with the facts of the present case in order to see
how far they are affected by the principles laid down by the House of Lords.

The action out of which the present appeal arises was brought under the
Fatal Accidents Act, 1846 by the widow of a foreman erector of cranes who
was killed by the falling of the jib of a crane which he had been responsible
for erecting the action is brought against the manufacturers of the crane,
who sold it in parts to a firm of builders who were themselves to assemble
the parts, and who in fact did this under the supervision of the man who was
killed. It seems to be clear that two of the cog-wheels used in the working of
the crane did not fit accurately. The extent of the in inaccuracy might be a
question of doubt it might be no more than was to be expected in a new
crane; and in erecting it the inaccuracy would be discovered and put right;
on the other hand the inaccuracy might be, and I will assume that in this
case it was, more than a slight difference in measurement which might be
expected and put right when the crane was erected from the parts. The
action, not being between the seller of the crane and the purchaser of the
parts to be assembled, the question is, was there any liability on the part of
the manufacturers to the employee of the purchaser? Was there a liability in
tort?

The judge did not allow the case to go to the jury, and the evidence on which
he came to his is conclusion included the testimony of three men who were
working with the deceased man and were under his control. All three agreed
that me deceased while the crane was being assembled, ascertained that
the cog-wheels did not fit properly, that their inaccuracy was such that the
crane was working with unusual stiffness, that he examined the cog-wheels
and found where the inaccuracy was that required to be corrected, that he
marked those inaccuracies with chalk in order that they might be corrected,
and that he said that he would have to report the matter to his principles. In
spite of this discovery, marking, and matter to his principles, In spite of this

161
discovery, making and statement of his intention to report, he began working
the crane before the inaccuracies had been corrected, In working it in that
condition he was, while standing under the jib, killed by its fall, the fall being
due to the effect of the inaccuracies which he had discovered. That evidence
leads to one conclusion only- namely that after the manufacturers had
supplied the parts of the crane to their purchasers there was an opportunity
for examination in that the purchasers were going to assemble the parts,
that opportunity was used by their skilled erector, who examined the wheels
and found their condition and did not rectify it.
We have repeatedly held that when a plaintiff gives evidence which is only
consistent with the accident being caused by his own negligence the judge
ought to withdraw the case from the jury instead of leaving it to them to say
whether the admitted facts constituted negligence. Mc Cardie J. took this
view, saying:

I repeat in this case that, so far from asking the defendants to erect
this machine, Mr. Smith left it to his own man, not to inexperienced
men, because again and again in the course of the exceptional
experience, with full responsibility and truth worthy in every way.
Where then was the concealed defect? I can only say this, that if there
was negligence on the part of the defendants with regard to this
meshing, then, a fortiori, there was negligence on the part of Farr, who
knew the exact state of affairs, who allowed the crane to be worked
with a knowledge of that state of affairs, and who was the first to be
responsible for the use of the crane which led to the accident. I cannot
see on the authorities, therefore, that there is any cause of action for
this alleged negligence by the defendants, if there was negligence

That is exactly the view I have endavoured to state.

162
That judge dealt with another matter. There has been a difference of opinion
between the judges of the United States and the judges of this country as to
the circumstances in which a vendor may in respect of defects in goods sold
by him be liable to persons with whom he had no contract. American
authority on this subject begins with Thomas v. Winchester. There the vendor
was asked for dandelion extracts, but carelessly sold extract of belladonna
instead, with the result that a person with whom he has no contract used the
extract and suffered injury. The court held that the manufacturer was liable
in tort to the ultimate consumer. Lord Atkin, in his judgment in M Alisters
Case, referred to the latest case in America on this subject, the decision of
Cardozo J. in McPherson v. Buick Motor Co., where the same principle was
applied in the case of the purchaser of a motor car from a dealer to whom it
had been sold by the manufacturer. The purchaser from the dealer was
injured by a defective wheel, which could be discovered by reasonable
inspection, and he sued; not the dealer from whom he had brought the car,
but the manufacturer who had made it. I notice that in his very careful
judgment Cardozo J. points out that the manufacturer could by reasonable
inspection have discovered the defect. There does not seem to have been
any discussion of the question whether the purchaser could have discovered
the defect. The cases cited in that judgment in some of their results differ
very widely from the judgment of the House of Lords in MAlisters Case.
McCardie J., in the present case, said that if he had been left to himself,
unfettered by authority, which he regards with considerable contempt, he
would have come to the same conclusion as Loard Esher (then Brett M.R.)
came to in Heaven v. Pender.

That remark, I think, must have been due to momentary forgetfulness,

because Lord Esher, in Le Lievre v. Gould restricted the proposition he stated
in Heaven v. Pender. If he had been left to himself McCardie J. would have
agreed with the American authorities. I agree with what Lord Atkin said in M
Alisters Case:

163
 I venture to say that in the branch of the law which deals with
civil wrongs, dependent in England, at any rate, entirely upon the
application by judges of general principles also formulated by
judges, it is of particular importance to guard against the danger
of stating propositions of law in wider terms that is necessary,
lest essential factors be omitted in the wider survey and the
inherent adaptability of English law be unduly restricted. For this
reason it is very necessary, in considering reported cases in the
law of torts, that the actual decision alone should carry authority,
proper weight, of course, being given to the dicta of the judges

English judges have been slow in stating principles going for beyond the
facts they are considering. They find themselves in a difficulty if they state
too wide propositions and find that they do not suit the actual facts.

In approaching the decision of the House of Lords in M` Alister's Case, we

have to see exactly what they have stated, and how they have limited their
propositions. Lord Atkin begins by stating this proposition:

"The rule that you are to love your neighbour becomes, In. law, you
must not injure your neighbour, and the lawyer's question, who is my
neighbour? receives a restricted reply. You must take reasonable care
to avoid acts or omissions which you can reasonably foresee would be
likely to injure your neighbour. Who then, in law is my neighbour? The
answer seems to be person who are so closely and directly affected by
my act that I ought reasonably to have them in contemplation as being
so affected when I am directing my mind to the acts or omissions
which are called in question."

164
That is very like the way in which Lord Esher restated the proposition in Le
Livre v. Gould. There a surveyor of a building contract gave certificates that
certain stages of the work had been reached. These certificates were
negligently given and were inaccurate. On the faith of them, mortgagees had
advanced money. Later, finding out the inaccuracies, the mortgagees sued
the surveyor for negligently giving the certificates. His answer was that he
owed no duty to the mortgagees and it was held by the Court of contention.
Lord Esher restate his proposition thus: If one man is near to another, or is
near to the property of another, a duty lies upon him not to that which may
cause a personal injury to the other, or may injure his property. With the
greatest respect to Lord Asher, that is not accurate. A man may be near to
another, he may, for example, have a plot adjoining that on which the other
has just erected a house, and the second man may build a house which shuts
out the view of the first house and depreciates its value. He owes no legal
duty not to do this, but he has caused injury to the man near to him, and yet
he is not within the language used by Lord Esher. Again a shopkeeper finds a
shop has been erected next door to him? The second shopkeeper selling the
same class of goods at half the price charged by the other. The second man
intends to

injure the first, but the first has no cause of action, although the two ,are
near to each other. Again, a person may on his own land interfere with
underground water with the intention of injuring .his neighbour but no cause
of action arises: Bradford Corporation v. Bpickles. It is quite clear that the
statement, both of Lord Esher and Lord Atkin, needs qualification, the nature
of which was discussed by the House of Lords in Sorrell v. Smith

Apart from the general proposition stated by Lord Atkin, which is wider than
is necessary, the House of Lords, in my view, has very definitely limited in
the case before it the point at which liability exists on the part of the

165
manufacturer to a person who ultimately uses the goods which the
manufacturer has sold. In the particu1ar case the facts were these: A
manufacturer of 'ginger beer sold his ginger beer in opaque bottles. into one
of the bottles a snail, had crept. The manufacturer filled the bottle without
notising the snail and corked it up. The bottle being opaque no one could see
the snail, even if the bottle were held up. Ultimately the bottle with the snail
in it passed to a consumer who drank the contents, and, having been made
ill, sued the manufacturer. The Court of Session held that there was no privity
between the manufacturer and the consumer. The House of Lords reversed
that decision, basing its judgment on the fact that the consumer was in such
a proximate relation to the manufacturer that legal relations resulted; and
the finding of proximate relationship was rested on the fact that the
manufacturer sent out his goods in such a container that no one could
discover the defect until the consumer had begun to consume the ginger
beer, for the snail did not necessarily come out when the ginger beer was
poured out. There was thus no opportunity of independent examination
between the manufacturer and the consumer. That proximate relationship
according to the three Law Lords who constituted the majority, created the
liability of the manufacturer. Lord Thankerton said:

"The present case is that of a manufacturer and a consumer, with

whom he has no contractual relation, of ail article which the
manufacturer did not know to be dangerous, and; unless the consumer
can establish a special relationship with the manufacturer, it is clear, in
my opinion, that neither the law of Scotland nor the law of England will
hold that the manufacturer has any duty towards the consumer to
exercise diligence. In such a case the remedy of the consumer , if any,
will lie against the intervening party from whom he has procured the
article. I am aware that the American courts, in the decisions reffered
to by my noble and learned friend. Lord MacMillan, have taken a view
more favourable to the consumer.

166
There, obviously, the liability is rested upon the fact that the manufacturer
sends out the ginger beer in such a condition that it cannot be inspected
until it is consumed. The impossibility of intermediate examination makes
the relation so proximate that there is a liability Lord MacMillan puts it in this
way:

It may be a good general rule to regard responsibility as ceasing when

control ceases. So also where as between the manufacturer and the
user there is interposed a party who has the means and opportunity of
examining the manufacturers product before he reissues it to the
actual user. But where, as in the present case, the article of
consumption is so prepared as to be intended to reach the consumer in
the condition in which it leaves the manufacturer and the manufacturer
takes steps to ensure this by sealing or otherwise closing the
container, so that the contents cannot be tampered with, I regard his
control as remaining effective until the article reaches the consumer
and the container is opened by him. The intervention of any exterior
agency is intended to be excluded, and was in fact in the present case
excluded.

That is substantially the same ground. Lord Atkin concludes his judgment in
these words:

If your Lordships accept the view that the appellants pleading

discloses a relevant cause of action, you will be affirming the
proposition that by Scots and English law alike a manufacturer of
products which he sells in such a form as to show that he intends them
to reach the ultimate consumer in the form in which they left him, with
no reasonable possibility of intermediate examination, and with the
knowledge that the absence of reasonable care in the preparation or

167
 putting up of the products is likely to result in injury to the consumers
life or property, owes a duty to the consumer to take that reasonable
care.

There again the liability is rested upon no reasonable possibility of

examination between the manufacturer and consumer. Among other
authorities cited Lord Atkin refereed to the decision Caledonian Ry.co v.
Mulholland which was binding upon him. There the owner of a wagon hired it
out to carry goods knowing that it would leave their railway and pass on to
the line of another railway where it would be discharged by workem of the
second railway company or of a customer of that railway. The House of Lords
held that there was no liability in those circumstances by the owners of the
wagon to the workman who was injured by using it.

Lord Atkin distinguished that case by saying that there was ample
opportunity of inspection by the second railway; the relations were not
proximate. Throughout his judgment, in passage after passage, he makes the
liability turn upon the question of proximate relationship, and rests the
proximate relationship on the fact that there could be no intervention
between the manufacturer and the consumer, because they way in which the
ginger beer was put up prevented examination, so that there was no
intermediate person who could or would examine. If that is the line on which
the case proceeded, how does it apply to the present case?

The manufacturers of the crane sent out the crane in parts; they were not to
assemble the parts. If there were defects in the party they might be of the
class that would be discovered by whoever assembled the parts; the
purchasers, through the deceased man; discovered the defects in
assembling the parts and saw that they required to be remedied, but
nevertheless the deceased took upon himself the responsibility of working
the crane before the defects were remedied.

168
Those facts bring the case clearly within the principle of Caledonian Ry. Co v.
Mulholland, and equally clearly, do not bring it within the decision of M
Alisters Case. Here there was ample opportunity for intermediate
examination before the deceased man met with his accident. Counsel for the
appellant said that any question of contributory negligence ought to have
been left to the jury. It appears to me that the difficulty arises earlier than
that on the decision of the House of Lords in Caledonian Ry. Co. v. Mulholland
and by exclusion in M Alisters Case. In this case McCardie, J. was right in
deciding as he did, and in those circumstances the appeal must be dismissed
in spite of the new view involved in the recent decision of the House of
Lords.

(Lawrence L.J. and Greer L.J. come to the same conclusion ).

Appeal dismissed.

169
 (J) GRANT v. AUSTRALIAN
KNITTING MILES (1936) A.C.85 (PC)

The appellant who contracted dermatitis or an external origin as the, result

of wearing a Woollen garment which, when purchased from the retailers, was
in a defective condition owing to the presence of cases sulphites which, it

170
was found, had been negligently left in it in the process of manufacture,
claimed damages against both retailers an manufacturers: -

Lord Wright:
The retailers, accordingly, in their lordships' judgment are liable in contract:
so far as they are concerned, no question of negligence is relevant to the
liability in contract. But when the position of the manufacturers is
considered, different questions rise: there is no privity of contract between
the appellant and the manufacturers between them the liability, if any must
be in tort, and the gist of the cause of action is negligence. The facts set out
in the foregoing show, in their Lordships' judgment, negligence in
manufacture. According to the evidence, the method of manufacture was
correct: the danger of excess sulphites being left was recognized and was
guarded against: the process was intended to be foolproof. If excess
sulphites were left in the garment, that could only be because someone was
at fault. The appellant is not required to lay his finger on the exact person in
all the chain who was responsible, or to specify what he did wrong.
Negligence is found as a matter of inference from the existence of the
defects taken in connection with all the known circumstances even if the
manufacturers could by apt evidence have rebutted that inference they have
not done so.

On this basis, me damage suffered by the appellant was caused in fact

(because the interposition of the retailers may for this purpose in the
circumstances of the case be disregarded) by the negligent or improper way
in which the manufacturers made the garments. But this more sequence of
cause and effect is not enough in law to constitute a cause of action in
negligence, which is a complex concept, involving a duty as between the
parties to take care, as well as a breach of that duty and resulting damage. It
might be said that there was no relationship between the parties at all: the
manufacturers, it might be said, parted once and for all with the garments

171
when they sold them to the retailers. and were with the garments when they
sold them to the retailers, and were therefore not concerned with their future
history, except in so far as under their contract with the retailers they might
come under some liability: at no time, it might be said, had they any
knowledge of the existence of the appellant: the only pag on which it might
be sought to support a relationship of duty was the fact that the appellant
had actually worn the garments, but he had done so because he had
acquired them of a purchase from the retailers, who were at that time the
owned of the goods by a sale which had vested the property in the retailers
and is vested both property and control from the manufacturers. It was said
there could be no legal relationships in the matter save those under the two
contracts between the respective parties to those contract, the one between
the manufacturers and ,the retailers and the other between the retailers and
the appellant. These contractual relationship (it might be said) covered the
whole field and excluded any question of tort liability: there was no duty
other than the contractual duties.

This argument was based on the contention that the present case fell outside
the decision of the House of Lords in Donoghue's case. Their Lordships, like
the judges in the Courts in Australia, will follow that decision, and the only
question here can be what that authority decides and whether this case
comes within its principles. In Donoghue's case (i) the defendants were
manufacturers of ginger-beer which they bottled: the pursuer had been given
one of their bottles by a friend who had purchased it from a retailer who in
turn had purchased from the defendants, There was no relationship between
pursue and defenders except that arising from the fact that she consumed
the ginger-beer they had made and bottled. The bottle was opaque, so that it
was impossible to see that it contained the decomposed remains of a snail, it
was sealed and stoppered so that it could not be tampered with until it was
opened in order that the contents should be drunk. The House of Lords held

172
these facts established in law a duty to take care as between the defenders
and the pursuer.

Their Lordships think that the principle of the decision is summed up in the
form in which they left him with no reasonable possibility of intermediate
examination, and with the knowledge that the absence of reasonable care in
the preparation or putting, up of the products will result in an injury to the
consumer's life or property, owes a duty to the consumer to take that
reasonable care.

This statement is in accord with the opinions expressed by Lord Thankerton

and Lord Macmillan, who in principle agreed with Lord Atkin .

In order to ascertain whether the principle applies to the present case, it is

necessary to define what the decision involves, and consider the points of
distinction relied upon before their Lords ships.

It is clear that the decision treats negligence, where there is a duty to take
care, as a specific tort in itself, and not simply as an element in some more
complex relationship or in some specialized breach of duty, and still less as
having any dependence on contract. All that is necessary as a step to
establish the tort of actionable negligence is to define the precise
relationship from which the duty to take care is to be deduced. It is, however,
essential in English law that the duty should be established: the mere fact
that a man is injured by mother's act gives in itself no cause of action: if the
act is deliberate, the party injured will have no claim in law even though the
injury is intentional so long as the other party is merely exercising a legal
right: if the act involves lack of due care, again no case of actionable
negligence will arise unless the duty to be careful exists. In Donoghue's case
the duty was deduced simply from the facts relied on namely, that the
injured party was one of a class for whose use, in the contemplation and

173
intention of the makers, the article was issued to the world, and the article
was used by that party in the slate in which it was prepared and issued
without it being changed in any way and without there being any warning of,
or means of detecting, the hidden danger: there was, it is true, no personal
intercourse between the maker and the user; but though the duty is
personal, because it is inter partes, it needs no interchange of words, spoken
or written, or signs of offer or assent; it is thus different in character from any
contractual relationship; no question of consideration between the parties is
relevant: for these reasons the use of the word "privity" in this connection is
apt to mislead; because of the suggestion of some overt relationship like
that in contract and the word "proximity" is open to the same objection; if
the term "proximity" is to be applied at all, it can only be in the sense that
the want of care and the injury are in essence directly and intimately
connected; though there may be intervening transactions of sale and
purchase, and intervening handling between these two events are

themselves unaffected by what happened between them: "proxin1ity" can

only properly be used to exclude any element of remoteness, or of some
interfering complication between the want of care and the injury, and like
"plivity" may mislead by introducing alien ideas. Equally also may the word
"control" embarrass. though it is conveniently used in the opinions in
Donoghue's case to emphasize the essential factor that the consumer must
use the article exactly as it left the maker, that is in all material features. and
use it as was intended to be used. In that sense the maker may be said to
control the thing until it is used. But that again is an artificial use, because, in
the natural sense of the word, the makers parted with all control when they
sold the article and divested themselves of possession and property. An
argument used in the present case based on the word control" will be
noticed later.

174
It is obvious that the principles thus laid down involve a duty based on the
simple facts detailed above, a duty quit unaffected by any contracts dealing
with the thing, for instance, of sale by maker to retailer, and again by retailer
to consumer or to the consumers friend.

It may be said that the duty is difficult to define, because when the act of
negligence in the manufacture occurs there was no specific person towards
whom the duty could be said to exist: the thing might never be used: it might
be destroyed by' accident, or it might be scrapped, or in. many ways fails to
come into use in the normal way: in other words the duty cannot at the time
of manufacture be other than potential or contingent, and only can become
vested by the fact of actual use by a particular person. But the same
theoretical difficulty has been disregarded in cases like Heaven v. Pender, or
in the case of things dangerous per as or known to be dangerous, where
third parties have been held entitled to recover on the principles explained in
Dominion Natural Gas Co., Ltd. v. Collins & Perkins.

In Donoghue's the thing was dangerous in fact, though the danger was
hidden, and the thing was dangerous only because of want of care in making
it; as Lord Atkin points out in Donoghue's case, the .distinction between
things inherently dangerous and things only dangerous because of negligent
manufacture cannot be regarded as significant for the purpose of the
questions here involved.

One further point may be noted. The principle of Donoghues case can only
be applied where the defect is hidden and unknown to the consumer,
otherwise the directness of cause and effect is, absent: the man who
consumes or uses a thing which he knows to be noxious cannot complain in
respect of whatever mischief follows, because it follows from his own
conscious volition in choosing to incur the risk or certainly of mischance.

175
If the foregoing are the essential features of Donoghue's case they are also
to be found. in their Lordships' judgment, in the present case. The presence
of the deleterious chemical in the pants, due to negligence in manufacture,
was a hidden and latent defect, just as much as were remains of the snail in
the opaque bottle: it could not be detected by any examination that could
reasonably be made. Nothing happened between the making of the
garments and their being worn to change their condition. The garmets were
made by manufacturers for the purpose of being worn exactly as they were
worn in fact by the appellant: it was not contemplated that they should be
first washed. It is immaterial that the appellant has a claim in contract
against the retailers, because that is a quite independent cause of action,
based on different considerations, even though the damage may be the
same. Equally irrelevant is any question of liability between them. The tort
liability is independent of any question of contact.

It was argued, but not perhaps very strongly, that Donohues case is a case
of food or drink to be consumed internally, whereas the plant here were to be
worn externally. No distinction, however, can be logically drawn for this
purpose between a noxious thing taken internally and a noxious thing
applied externally the garments were made to be worn next the skin: indeed
Lord Atkins ..... specifically puts as examples of what is covered by the
principle he is enunciating" things operating externally, such as "an ointment
soap, a cleaning fluid or clearing powder."

Mr. Greene: however, sought to distinguish Donohues case from the present
on the ground-that in the former the makers of the ginger-beer had retained
"control" over it in the sense that they had placed it in Stoppard and scaled
bottles. so that it would not be tampered with until it was opened to be
drunk, whereas the garments in question were merely put into paper packets
each containing six sets, which in ordinary course would be taken down by
the shopkeeper and opened, and the contents handled and disposed of

176
separately, so that they would be exposed to the air. He contended that
though there was no reason to think that the garments when sold to the
appellant were in any other condition least of all as regards sulphur contents,
than when sold to' the retailers by the
manufacturers still the mere possibility and not the fact of their condition
having been changed was sufficient to distinguish 'Donohues case: there
was no "control" because nothing was done by the manufacturers to exclude
the possibility of any tampering while the goods were on their way to the
user. Their Lordships do not accept that contention
sealed. The essential point in this regard was that the a tide should reach
the consumer or user subject to the Sfu~1e defect as it had when it left the
manufacturer. That this was true of the garment is in their Lordships' opinion
beyond question. At most there might in other cases be a greater difficulty of
proof of the fact.

Mr. Greene further contended on behalf of the manufacturers that if the

decision in Donoghue's case were extended even a hairs-breadth, no line
could be drawn, and manufacturer's liability would be extended indefinitely.
He put as an illustration the case of a foundry which had cast a rudder to be
fittled on a liner: he assumed that it was fitted and the steamer sailed the
seas for some years: but the rudder had a latent defect due to faulty and
negligent casting, and one day it broke with the result that the vessel was
wrecked, with great loss of life and damage to property. He argued that if
Donoghue's case were extended beyond its precise facts the maker of the
rudder would be held liable for damages of an indefinite amount, after an
indefinite time; and to claimants indeterminate until the event. But it is dear
that such a state of things would involve many considerations far removed
from the simple facts of this case. So many contingencies must have
intervened between the lack care on the part of the makers and the casualty
that it may be that this law would apply, as it does in proper cases not
always according to strict logic, the rule that cause and effect must not be

177
too remote: in any case the e1ement of directness would obviously be
lacking. Lord Atkin deals with that sort of question in Donoghue's case where
he refers to Earl v. Lubbock: he quotes the common sense opinion of
Mathew, L.J. "It is impossible to accept such a wide proposition, and. indeed,
it is difficult to see how, if it were the law, trade could be carried on."

In their Lordships' opinion it is enough for them to decide this case on its
actual facts.

No doubt many difficult problems will arise before the precise limits of the
principle are defined: many qualifying conditions and many complications

of fact may in the future come before the Courts for decision. It is enough
now to say that their Lordships held the present case to come within the
principle of Donoghue's case and they think that the judgment of the Chief.
Justice was right in the result and should be restored as against both
respondents and that the appeal should be allowed, with costs here and in
the Courts below, and that the appellant's petition for leave to adduce
further evidence should be dismissed, without costs.

They will humbly so advise his Majesty.

178
 (K) CANDLER v. CRANE CHRISTMAS & CO
COURT OF APPEAL (Cohen, Asquith and Denning, L.J.J.,)
(1951) 1 ALL. E.R.426 at 428 -45

DENNING. L.J.: In September, 1946 the plaintiff invested 2,000 in a

company called Trevanance Hydraulic Tin Mines, Ltd. (which I will call the
company"), and he has lost it all because the company turned out to be a
failure. He now brings this action against the defendants, who are the
company's accountants and auditors, claiming that he was induced to invest
the money because of erroneous accounts put before him by them and on
the faith of which he invested his money. The judge has found that the
accounts were "defective and deficient" and presented a position of the
company which was "whooly contrary to the actual position" that the
accountants were "in fact extremely careless in the preparation of the
accounts," and that the damage suffered by the plaintiff was plain." , but,
nevertheless the judge dismissed his claim because, in his opinion, there was
no duty" of care owed by the accountants to the plaintiff.

The case raises a point of law of much importance because counsel for the
plaintiff submitted that, although there was no contract between the plaintiff
and defendants, nevertheless, the relationship between them was so close
and direct that the defendants did owe a duty of care to him within the
principles stated in Donoghue v. Stevenson (1), whereas counsel on behalf of

179
the defendants submitted that the duty owed by the defendants was purely
a contractual duty owed by them to the company, and, therefore, they were
not liable for negligence to a person to whom they were under no contractual
duty. Before discussing this point of law, I must set out the facts in some"
detail so as to see what exactly the relationship was between the plaintiff
and the defendants.

In November, 1944, a Mr. Donald Ogilvie fanned the company to work some
surface tin in Cornwall, with himself as chairman and managing director for
life. In March, 1946, he told the defendants that he wanted them to prepare
the accounts of the company and to write up the books.
The defendants entrusted the work to one of their clerks named Henry
Fraser, but he had not done much towards it when, in, June, 1946, Mr. Ogilvie
told the defendants that he had decided "to go out for substantially more
capital" and asked them to insert an advertisement in

"The Times as quickly as possible. They arranged it for him, and it appeared
on July 8, 1946, in these words:

"10,000 established tin mine (low capitalization) in Cornwall seeks

further capital install additional milling plant, directorship and active
participation open to suitable applicant - Apply," etc,

The plaintiff answered that advertisement in these words:

"I should be interested to take an active part in a Cornish tin mine and have
about 2,000 to invest. Will you let me have particulars?"

The defendants sent that letter unopened to Mr. Ogilvie who got into touch
with the plaintiff. As a result, in the first half of September, 1946, Mr. Ogilvie
showed the plaintiff the Cornish workings and told him that if he invested
2,000 he would get a directorship in the company and a service agreement

180
for two years at 10 a week. The plaintiff said, however, that he wanted to
see the balance sheet of the company first. As a result of the plaintiffs
request, Mr. Ogilvie started pressing the defendants to get out the accounts.
He told their Clerk, Mr. Fraser, that he wanted the accounts as quickly as
possible, and that they were required to be shown to a potential investor in
the company, whose name was Candler. Mr. Fraser was asked in the witness
box:

"Q. - Did you assume at that time that the accounts that Mr. Ogilvie was
pressing for had some relation to his negotiations with Mr. Candler?
A thought there would be a connection, of course. Yes, I suppose so.
Mr. Fraser, accordingly, in the middle of September, 1946, worked on the
accounts very intensively, going to Mr. Ogilvie's flat two or three times a day
for l1is explanation of various items. He was, as the judge found, under the
mistaken impression that it was, in substance, Mr. Ogilvie's business and he
accepted Mr. Ogilvie's statements Without verification.
On Monday,. Sept. 16, 1946, Mr. Ogi1vie asked Mr. Fraser to meet the
plaintiff the next day so as to give him information relating of the accounts of
the company and accordingly on Tuesday Sept. 17. Mr. Fraser went with Mr.
Ogilvie to meet the plaintiff and took with him the draft accounts which he
had by that time prepared. At the meeting Mr. Ogilvie introduced Mr. Fraser
to the plaintiff as the representative of Crane Christmas & Co .. the
accountants and auditors of the company who were preparing the accounts,
and he introduced the plaintiff to Mr. Fraser as a gentleman who was
contemplating an investment in the company. Mr. Fraser knew of course, of
the advertisement which his firm had inserted for new capital, and he knew,
when the meeting commenced, that the negotiations depended on the
plaintiff being satisfied with the balance sheet of the company. At this
meeting on Sept. 17, Mr. Fraser produced the draft accounts. They had
already, at that time, on them a certificate ready for signature by the
defendants, saying in the usual

181
Formula:

We have audited the balance sheet as above set forth, We have

obtained all the information and explanations we have required
and we report that such balance sheet is in our opinion properly
drawn up so as to exhibit a true and correct view of the state of
the company's affairs, according to the best of our information
and the explanations given to us and as shown by the books of
the company."

That certificate was not signed at the time, but Mr. Fraser told the plaintiff
that it would be signed with a clear docket, subject to one or two small
alterations which he wished to consider for another two or three days. At the
meeting the plaintiff took down in his own handwriting a copy of the
accounts, because he wanted to put them before his own accountant for
advice. There was a conflict of recollection as to how he came to take them
down; but the judge said that it did not matter because Mr. Fraser clearly
assented to the plaintiff taking a copy. The judge said:

"Having regard to the fact that Mr. Fraser was plainly aware of the purpose
for which the draft accounts were required, I entertain no doubt at all that he
was aware of and acquiesced in the showing of these accounts to Mr.
Candler: indeed the meeting would. have been wholly pointless but for that
purpose".

Mr. Fraser drew the plaintiff s attention to the fact that some of the items in
the draft balance sheet might need revision and the parties arranged to
meet again on Sept. 20, 1946. The judge expressly finds that, when the
meeting of Sept. 17 broke up, Mr. Fraser must have been satisfied, not only
that the plaintiff was considering an investment in the company, but was
taking with him and relying on the draft accounts which Mr. Fraser had

182
prepared. The parties did, in fact, meet again on Sept. 20 By that time Mr.
Fraser had concluded his examination of the books and drew the plaintiff's
attention to some modifications which are for present purposes immateria1.
The plaintiff had meanwhile himself got advice from his own accountant and
at the end of the meeting the plaintiff told Mr. Ogilvie and Mr Fraser that he
was satisfied and would invest 2,000 in the company. He sent off a cheque
for 500 that day to Mr. Ogilvie and the balance of1,500 on Sept. 25, 1946.

The judge has found that, to Mr. Frasers knowledge, the plaintiff was induced
to believe that the accounts, as modified on Sept. 20,' 1946, would be the
certified accounts as they emerged from the defendants, and that is what
did, in fact, happen. On Sept. 27, 1946, the accounts were certified by the
defendants in precisely the same form Mr. Fraser had
shown them to the plaintiff at the meeting of Sept. 20, without any
alteration. It has subsequently turned out that the accounts gave an
altogether false picture of the position of the company. Instances were given
to us which show that there was no verification whatever by the defendants
of the information which they were given by Mr. Ogilvie. Thus, among the
assets were inserted: "Freehold cottages (at cost) 650. In fact, the
company had no title deeds for the cottages. The cottages stood in Mr.
Ogilvie's name and he had mortgagee them to the bank for his own
overdraft. Again: "Leasehold buildings (at cost) 650." The company had no
leases; the leases stood in Mr. Ogilvie's name and were ultimately forfeited
for non-payment of rent. It was admitted that the defendants had entirely
failed to use proper care and skill in the preparation and presentation of the
accounts.

The result was disastrous for the plaintiff. In September, 1946, he entered
the service of the company and moved down to Cornwall and worked at the
mine. Indeed, he invested in November, 1946 another 200. A little later his
suspicious became aroused because he discovered that his 2,000 had not

183
been applied for the purposes of the company's business, but that most of it
had been withdrawn by Mr. Og1lvie for his own private purposes. Ultimately
he discovered that the company was in a very bad way. It was not even able
to pay his salary," He himself issued writs against the company on May 1 and
June 30, 1947, for salary and money lent. On Aug. 11, 1947, he presented a
petition for winding-up and on Dec. 15, 1947, a winding-up order was made.
There are no assets
The bank took the freehold cottages for Ogilvie's debt. The lessors forfeited
the leasehold property. Ogilvie has gone bankrupt. The plaintiff has lost his
2,000 altogether, and he says it is due to the carelessness of the
defendants because, if they had put before him accounts which had been
properly prepared, the true position of affairs would have been disclosed and
he would never have invested his money in the company. The only defences
raised by the defendants at the hearing of the appeal were: (i) that Mr. Fraser
was not acting in the course of his employment; (ii) that even if he was, they
owed no duty of care to the plaintiff.

The judge seems to have treated it as beyond question that Mr. Fraser was
acting in the course of his employment, and I agree with him. There is no
doubt that Mr. Fraser was acting within his actual authority in writing up the
books and preparing the accounts, and, indeed, his action in so doing was
ratified and confirmed by the Senior partner who signed the certificate, but.
it is said that Mr. Fraser had no authority to show the draft accounts to the
plaintiff or to answer his queries, at any rate not without asking his principals
for permission to do so. The senior partner admitted that it was a very
common thing for accountants at the request of the chairman or person in
control of a company to give details of the company's accounts to a
prospective investor so as to induce him to
invest money, but he said that it was for the principal of the firm to do it and
not for a clerk. That may wel1 be so. It may not have been within Mr. Fraser's
actual authority, but that is not the point. A master is often made responsible

184
for the unauthorized or forbidden acts of his servant when he has for his own
purposes put the servant in a position where he can do the acts. Practical
good sense demands that, even though the master is hot at fault himself, he
should be responsible if the servant conducts himself in a way which is
injurious to others. He takes the benefits of the servant's rightful acts and
should bear the burden of his wrongful ones, and he is, as a rule, the only
one who has the means to pay. So here, I have no doubt that the defendants
are responsible for the

way in which Mr. Fraser conducted himself in preparing the accounts and
showing them to tl1e plaintiff, who, after all was perfectly innocent in the
matter and had not the slightest idea that Mr. Fraser had no authority to do
what he did.

I come now to the great question in the case: Did the defendants owe a duty
of care to the plaintiff? If the matter were free from authority. I should have
said that they clearly did owe a duty of care to him. They were professional
accountants who prepared and put before him these accounts, knowing that
he was going to be guided by them in making an investment in the company.
On the faith of those accounts he did make the investment, whereas, if the
accounts had been carefully prepared he would not have made the
investment at all. The result is that he has lost his money. In the
circumstances, had he not every right to rely on the accounts being prepared
with proper care and is he not entitled to redress from the defendants on
whom he relied? I say he is, and I would apply to the present case the words
of KNIGHT BRUCE, L.J .. in Slim v. Croucher (2), an analogous case ninety
years ago, where he said (l De G.F. & J. 527):

"A country whose administration of justice did not afford redress in a

case of the present description would not be in a state of civilization."

185
Turning now to authority, I can point to many general statements of principle
which cover the case made by some of the great names in the law: Lord
Eldon, L.C., in Evans v. Bicknell (3) (6 Ves. 183), Lord Campbell. L.C., in Slim
v. Croucher (2) (l De G.F. & J. 523), Lord Selborne, L.C., in Brownlie v.
Campbell (4) (5 App. Cas. 935), Lord Herschel1 in Derry v. Peek (5) (14 App.
Cas. 360), Lord Shaw of Dunfemline in Nocton v. Ashburton (Lord) (6) ([1914]
A.C. 972), and Lord Atkin in Donoghue v. Stevenson (1) ([1932] A.C. 581). It
is said, however that these statements of principle cannot be given effect to
because there is an actual decision of this court in 1893 which is to the
contrary. namely. Le Lieure v. Gould (7).

Before I consider the decision in Le Lieure v. Gould (7) I wish to say that in
my opinion. at the time it was decided current legal thought was infected by
two cardinal errors. The first error was one which appears time and time
again in nineteenth-century thought, namely, that no one who is not a party
to a contract can sue on it or on anything arising out
who is not a party to a contract can sue on it or on anything arising out of it.
This error has had unfortunate consequences both in the law of contract and
in the law of tort. So far as contract is concerned, I have said something
about it in Smith V" River Douglas Catchment Board (8) ([1949] 2 AU E.R,
187). So far as tort is concerned, it led the lawyers of that day to suppose
that, if one of the parties to a ,contract was negligent, in carrying it out, no
third person who was injured by that negligence could sue for damages op
account of it: see Winterbottom v. Wright (9) (10 M. & W. 109), Alton v.
Midland Ry. Co. (10) 19 C.B. N.S. 213), al"1d the notes in . Pasley v. Freeman
(11) (2 Smith L.C., 13th ed., pp. 103, 110); except in the case of t..hLTlgs
dangerous in thexI1selves, like guns: see Dexon v. Bell (12). This error lies at
the root of the reasoning of Bowen, L.J., in Le Lievre v. Gould (7) ([1893] 1
Q .B. 502), when he said that the law of England.

186
" ... does not consider that what a man writes on paper is like a gun or other
dangerous instrument ... "meaning thereby that, unless it was a thing which
was dangerous in itself, no action lay. This error was exploded by the great
case of Donoghue v. Stevenson (.l) {[l932] A.C. 562), which decided that the
presence of a contract did not defeat an action for negligence by a third
person, provided - that the circumstances disclosed a duty by the
contracting party to him. The second error was an error as to the effect of
Deny v. Peek (5), fu'! error which persisted for thirty-five years at least after
the decision, namely: that no action ever lies for a negligent statement even
though it is intended to be acted on by the plaintiff and is, in fact, acted on
by him to his loss. This error led the Court of Appeal in Low v. Bouverie (13)
to deny the correctness of Slim v. Croucher (2), and in Le Lieure v. Gould (7)
to deny 'the correctness of Cann v. Willson (14). The cases thus denied were
so plainly just that the very denial of them was itself an error. The error was,
however, exposed by Nadon v. Ashburton (6), which decided that an action
did lie for a negligent staten1ent where the circumstances disclosed a duty
to be careful, and that all that is to be deduced from (though not decided by)
Deny v. Peek (5) is that in th.e particular circumstances oj that ~ase there
was no duty to be careful.' Viscount Haldane, L,C., observed significantly
([1914] A.C. 947) that the auHlOrities subsequent to Derry v. Peek (5) had
shown

. a tendency to assume that it was intended to mean more than it did

In my opinion, these decision of House of Lords in Donoghue v. Stevenson (1)

and Nocton v. Ashburton (6) are sufficient to entitle this court to examine
afresh the law as to negligent statements.

The first submission put forward by counsel for the defendants was that a
duty to be careful in making statements arose only of a contractual duty to
the plaintiff or fiduciary relationship to him. Apart from such cases no action,

187
he said, had ever been allowed for negligent statements, and he urged that
this want of authority was a reason against it being allowed now. This
argument about the novelty of the action does not appeal to me. It has been
put forward in all the great cases which have been milestones of progress in
our law, and it has nearly always been rejected. If one reads Ashby v. White
(15), Pasley v. Freeman (11) and Donoghue v. Stevenson (1) one find that in
each of them the judges were divided in opinion. On the one side there were
the timorous souls who were fearful of allowing a new cause of action. On the
other side there were the bold spirits who were ready to allow it if justice so
required. It was fortunate for the common law that the progressive view
prevailed. Whenever this argument of novelty is put forward I call to mind
the emphatic answer given by PRATT. C.J., nearly two hundred years ago in
Chapman v. Pickersgill (16) when he said (2 Wils. 146):

I wish never to hear this objection again. This action is for a tort: torts
are infinitely various, not limited or confined, for there is nothing in
nature but may be an instrument of mischief

The same answer was given by Lord Macmillan in Donoghue v. Stevenson (1)
([1932] A.C. 619) when he said:

The criterion of judgment must adjust and adapt itself to the

changing circumstances of life. The categories of negligence are never
closed.

It needs only a little imagination to see how much the common law would
have suffered if those decisions had gone the other way.

The second submission of' counsel for the defendants was that a duty to take
care only arose where the result of a failure to take care will cause physical
damage to persons or property. It was far this reason that he did not dispute

188
two illustrations of negligent statements which I put in the course of the
argument - the case of an analyst who negligently certifies to a manufacturer
of food that a particular ingredient is harmless, whereas it is, in fact,
poisonous or the case of an inspector of lifts who negligently reports that a
particular lift is safe, whereas it is, in fact, dangerous. The analyst and the lift
inspector would. I should have thought, be liable to any person who was
injured by consuming the food or using the lift, at any rate if there was no
likelihood of intermediate inspection: Donoghue v. Stevenson (1); Haseldine
v. Daw & Son.. Ltd. U 7). Counsel said that might well be so because the
negligence there caused physical damage, but that the same would not
apply to negligence which caused financialoss. He referred to some
observations of Wrottesley. J. ([1939] 3 .All E.R. 209), which were in his
favour on this point: Old Gate Estates, Ltd. v. Toplis & Harding & Russell (18).
I cannot accept this as a valid distinction. I can understand that in some
cases of financial loss there may not be a sufficiently proximate relationship
to give rise to a duty of care, but if once the duty exists I cannot think that
1iability depends on the nature of the damage.

The third submission of counsel was that the duty owed by the defendants
was purely a contractual duty, and therefore, they were not liable for
negligence to a person to whom they were under no contractual obligation.
This seems to me to be simply a repetition of the nineteenth-century fallacy
which was stated in Alton v. Midland Ry. Co. (10) and exploded by Donoghue
v. Stevenson (1).

Let me now be constructive and suggest the circumstances in which I say

that a duty to use care in making astatement does exist apart from a
contract in that behalf. First, what persons are under such duty? My answer is
those persons such as accountants, surveyors, valuers and analysts whose
profession and occupation it is to examine books, accounts. and other things
and to make reports on which other people other than their clients - rely in

189
the ordinary course of business. Their duty is not merely a duty to use care in
their reports. Herein lies the difference between these professional men and
other persons who have been held to be under no duty to use care in their
statements, such as

Promoters who issue a prospectus: Derry v. Peek (5) (now altered by,statute
[Companies Act, 1948, s. 43]), and trustees who answer inquiries about the
trust funds: Low v. Bouverie (13), Those persons do not bring, and are not
expected to bring, any professional knowledge or skill into the preparation of
their statements. They can only be made responsible by the law affecting
persons generally, such as contract, estoppel, innocent misrepresentation or
fraud. It is, however, very different with persons who engage in a calling
which requires special knowledge and skill From very early times it has been
held that they owe a duty of care to those who are closely and directly
affected by their work apart altogether from any contract or undertaking in
that behalf; Thus, Fitz-Herbert in his NEW' Natura Brevium (1534) 9"1-D, says
that

" ... if a smith prick my horse with a nail ... 1 shall have my action upon
the case against him, without any warranty, by the smith to do it
well ... for it is the duty of every artificer to exercise his art rightly and
truly as he ought."

This reasoning has been treated as applicable not only to shoeing smiths,
surgeouns and barbers, who work with hammers, knives and scissors, but
also to shipbrokers and -clerks in the Custom House who work with figures
and make entries in books

" ... because their situation and employment necessarily imply a competent
degree of knowledge in making such entries ... ":

190
see Shiells v. Blackburne (19) (l Hy. Bl. 162, per Lord Loughborough),which
was not referred to by Devlin, J., in Heskell v. Continental Express, Ltd. (20)
([1950} 1 All E.R, 1042)" The same reasoning has been applied to medical
men who make reports on the sanity of others: see -Everett v. Griffiths (21)
([1920] 2 K.B. 182, 217). It is, I think also applicable to professional
accountants. They are not liable of course, for casual remarks made in the
course of conversation, nor for other statements made outside their work, or
not made in their capacity as accountants: compare Fish v. Kelly (22); but
they are, in my opinion, in proper cases, apart from any contract in the
matter, under a duty to use reasonable care in the preparation of their
accounts and in the making of their reports.

Secondly, to whom do these professional people owe this duty? I win t.ake
accountants, but the same reasoning applies to the others. They owe the
duty, of course, to their employer or client, ,and also, I think, to any third
person to whom they themselves show the accounts, or to whom they Is-now
their employer is going to show the accounts so as to induce him to invest
money or take some other action on them, I do not think, however, the duty
can be extended still further so as to include strangers of whom
they have heard nothing and to whom their employer without their
knowledge may choose to show their accounts. Once the accountant have
handed their accounts to their employer, they are not, as a rule, responsible
for what he does with them without their knowledge or consent. A good
illustration afforded by the decision Le Lievre v. Gould,. (7) itself, which I
certainly would not wish to call in question. ".The facts are somewhat
differently stated ill the various reports but collecting them together they
come to this: A surveyor there surveyed work for a building owner and
handed certificates to him so that the owner could know the amounts which
he had to pay the builder the building owner then chose to show the
certificates to his own mortgagees who advanced money on them instead of

191
on tile certificates of their own surveyor. The mortgagees then said that the
owners surveyor owed a duty of care to them. That was obviously untenable,
because they should have had the work surveyed by their own surveyor.
Indeed, they had actually stipulated for it . The relationship was, therefore,
one in which the inspection of an intermediate person might reasonably be
interposed, and was, consequently, too remote to raise a duty of care: see
LORD ATKIN in Donoghue v. Stevenson (1) ([1032] A.C. 582). Excluding such
cases as those, however, there are some cases of which the present is one
where the accounts know all the time, even before they present their
accounts, that their employer requires the accounts to show to a third person
so as to induce him to act on them, and then they themselves, or their
employers, present the accounts to him for the purpose. In such cases I am
of opinion that the accountants owe a duty of care to the third person.

The test of proximity in these cases is: Did the accountants know that the
accounts were required for submission to the plaintiff and use by him? That
appears from Langridge. v. Levy (23), as extended by CLEASBY, B., in George
v. Skivington (24) (L.R. 5.Exch. 5), and from the decision of CHITIY, J., in Cann
v. Willson (14) which is directly in point. In that case

a valuer made a valuation of property fur the very Purpose of enabling his
client to raise a mortgage on it. In order to further the transaction, the valuer
himself actually put the valuation before the mortgagees Solicitor, saying
that it was a very moderate valuation and not made in favour of the
borrower. The mortgagee advanced money on the faith of the valuation, but
it turned out that the valuer had been grossly careless and the mortgagee
lost his money Chitty. J., held that the valuer was liable in negligence, apart

192
from any contract at all. He said (39 Ch. p. 42).that the valuation was sent by
the valuer direct 'to the mortgagee's solicitor,

"for the purpose of inducing the plaintiff and his co-trustee, to layout
the trust money on mortgage. It seems to me that the defendant
knowingly placed themselves in that position; and, in point of law
incurred duty towards him to use reasonable care in the preparation of
the document called a valuation. I, think it is like the case of the supply
of an article - the supply of the hairwash in the case of George v:
Skivington (24)."

That reasoning seems to me to be good sense and good law. I know that in
Le Lieure v. Gould.(7) the Court of Appeal said that Cann v. Willson (14) was
wrongly decided but it, must be remembered that at, that time the general
opinion of the profession was that George .v. Skivington (24) on which Chitty,
J., relied, was itself wrongly decided or, at any rate, that the principle stated
in it by Cleasby, B., was wrong as per Field and,
Cave, JJ., and Bowen and Cotton, L.JJ., in Hecwen. v. Pender (25) (9
Q.B.D.306. 307; 11 g.B.D. 516, 517), and per Hamilton, .1., ill Blacker v. Lake
& Elliot, Ltd. (26). (l06 L. T. 533). If George v. Skivington (24) was wrong,
then, of course, Cann v. Willson (14) was wrong, for it was based on It. In
Donoghue v. Stevenson (l) however the House of Lords fully restored George
v. Skivington (24), and LORD Atkin approved ([1932] AC. 584) the reasoning
of Cleasby, B. It seems to me that by so doing the House of Lords have
implicitly restored Cann v. Willson(l4), because they have restored the case
on which it was based and, if Cann v.' Willson (14) is good law, it follows that
in the present case the accountants owed a duty of care to the plaintiff, for
the circumstances are indistinguishable.

Thirdly, to what transactions does the duty of care extend? It extends, I

think, only to those transactions for which the accountants knew their

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accounts were required. For instance, in the present case it extends to the
original investment of 2,000 which the plaintiff made in reliance on the
accounts, because the defendants knew that the accounts were required for
his guidance in making that investment, but it does not extend to the
subsequent 200 which he invested after he had been two months with the
company. This distinction, that the duty only extends to the very transaction
in mind at the time, is implicit in the decided cases. Thus, a doctor, who
negligently certifies a man to be a lunatic when he is not, is liable to him,
although there is no contract m the matter, because the doctor knows that
his certiI1c.ate is required for the very purpose of deciding whether the man
should be detained or not but,
An insurance company's doctor owes no duty to the insured person because
he makes his examination only for the purposes of the insurance company:
see Everett v. Griffiths (21} [1920j]3 K.B. 211. 217), where Atkin L. J
proceeds on the self same principles as he, expounded fully later in
Donoghue v. Stevenson (1). So, also, a Lloyd's surveyor for classification
purpose, negligently passes a mast as sound when it is not: is not liable to
the owner for damage caused by it breaking, because the surveyor makes
his survey only for the purpose of classifying the ship for the Yacht Register
and not otherwise: Humphery v. Bowers (27). Again, a scientist or expert
(including a marine hydrographer) is not liable to his readers for careless
statements in his published works. He publishes his work simply to give
information and not with any particular transaction in mind. When however,
a scientist or an expert makes an investigation and report for the very
purpose of a particular transaction, then, in my opinion, he is under a duty of
care in respect of that transaction.

It will be noticed that I. have confined the duty to cases where the
accountant prepares his accounts and makes his report for the guidance of
the very person in the very transaction in question. That is sufficient for the
decision of this case. 1 can well understand that it would be going too far to

194
make an accountant liable to any person in the land who chooses to rely on
tile accounts in matters of business, for that would expose him, in the words
of Cardozo. C.J., in Ultramares Corpn. v. Touche (28) [174 N .E. 444) to

" ... liability in an indeterminate amount for an indeterminate time to an

indeterminate class."

Whether he would be liable if he prepared his accounts for the guidance of a

specific class of persons in a specific class of transactions, I do not say.

I should have thought he might be, just as the analyst and lift inspector
would be liable in the instances I have given earlier. It is, perhaps, worth
mentioning that Parliament has intervened to make the professional man
liable for negligent reports given for the purposes of a prospectus: see s. 40
and s. 43 of the Companies Act, 1948. That is an instance of liability for
reports made for the guidance of a specific class of persons - investors in a
specific class of transactions - applying for shares. That enactment does not
help one way or the other to show what result the common law would have
reached in the absence of such provisions, but it does show what result it
ought to reach.

My conclusion is that a duty to use care in statement is recognized by

English law, and that its recognition does not create any dangerous
precedent when it is remembered that it is limited in respect of the persons
by whom it is owed and the transactions to which it applies.

One final word, I think the law would fail to serve the best interests of the
community if it should hold that accountants and auditors owe a duty to no

195
one but their client. Its influence would be most marked cases where the
client is a company or firm controlled by on man. It would encourage
accountants to accept the information which the one man gives them
without verifying it, and to prepare and present the accounts rather as a
lawyer prepares and presents a case, putting the best appearance on the
accounts they can without expressing their personal opinion of them. This is,
to my way of thinking; an entirely wrong approach. There is a great
difference between the lawyer and the accountant. The lawyer is never
called on to express his personal belief in the truth of his client's case,
whereas the accountant, who certifies the accounts of his client, is always
called on to express his personal opinion whether the accounts exhibit a true
and correct view of his client's affairs, and he is required to do this, not so
much for the satisfaction of his own client, but more for the guidance of
shareholders, investors, revenue authorities, and others who may have to
rely on the accounts in serious matters of business. If we should decide this
case in favour of the defendants, there will be no reason why accountants
should ever verify the word of the one man in a one-man company, because
there will be no one to complain about it. The one man who gives them
wrong information will not complain if they do not verify it, He wants their

backing for the misleading information he gives them, and he can only get it
if they accept his word without verification. It is just what he wants so as to
gain his own ends. And the persons who are misled cannot complain because
the accountants owe no duty to them. If such be the law, I think it is to be
regretted, for it means that the accountants' certificate, which should be a
safeguard, becomes a snare for those who rely on it. I do not myself think
that it is the law. In my opinion, accountants owe a duty of care not only to
their own clients, but also to all those whom they know will rely on their
accounts in the transactions for which those accounts are prepared. I would,

196
therefore, be in favour of allowing the appeal and entering Judgment for the
plaintiff for damages in the sum of 2.000.

Asquith, L.J.: On two points I entirely agree with the judgment delivered by
Denning, L.J. I agree that the cause of action based on an alleged breach of
duty occurring after the plaintiff becml1c a shareholder cannot be made out
if only because the damage relied on preceded the breach. I also agree, for
the reasons he has given, that Mr. Fraser was dearly acting within the scope
of his employment by the defendant firm in showing the draft accounts and
giving certain other information to the plaintiff. I have, however, the
misfortune to differ from DENNING, L.J., on me more important point raised in
this case. The point may be put in, this way. Assume that Mr. Fraser's
negligent misrepresentations had been made by his employers, the partners
in the defendant firm. Assume further, as the fact is, that there was no fraud
and no contract or fiduciary relationship between them and the plaintiff.
Would they, in those events, have been liable to the plaintiff in respect of
damage incurred by him through acting on those negligent
misrepresentations? The defendants say "No", they do not question that, in
the absence of fraud, contract and. fiduciary relationship, there are cases in
which A. may be under a legal obligation to B. to use reasonable care for
some purposes. Their proposition is that under the conditions assumed in the
present case the defendants were under no duty, sounding in tort, to the
plaintiff to take care that their representations of fact should be true. They
rely in support of this contention of Le Lievre v. Gould (7), a decision binding
on this court, I agree with the learned judge in considering that authority to
be conclusive in their favour unless it can be, shown to have been overruled
or to be distinguishable,

The plaintiff's case is that, whatever may have been the position before
Donoghue v. Stevenson (I) ( as for short, I will call it), and, secondly, to
inquire what difference,if any, that case has made. I do not think it is useful

197
to go back further than Derry v. Peek (5), decided in 1889. In that case the
plaintiff subscribed for shares in a limited company in reliance on a
prospectus contained a negligent mis-statement made in good faith. The
claim on the writ as amended was for damages for deceit, for that and
nothing else. There was no independent alternative claim in respect of
negligent or innocent misrepresentation. The Court of Appeal held that fraud
would be sufficiently established by proof that the directors had no
reasonable grounds for believing the statement they made. The House of
Lords, reversing the Court of Appeal, held that this was not enough to
constitute fraud. If the defendants believed what they said, it mattered not
how credulous they were or how groundless their belief. Fraud necessarily
connotes dishonesty and no degree of mere stupidity can serve in its place.
The case is, therefore, primarily, and according to one view solely, a decision
on the meaning of the word fraud and is, therefore, not directly relevant to
the main issue in the present case from which fraud, though originally
alleged, has been eliminated. Nevertheless, it is indirectly relevant and
illuminating. For, although it does not decide in terms, it clearly assumes or
implies that a merely negligent misrepresentation made by director to
potential subscribers for shares, on which some of them act to their
detriment, affords the latter no remedy. The notion that Donoghue`s case (1)
was intended parenthetically or sub silentio to sweep away this substratum
of Derry v. Peek (5) seems to me wuite unconvincing.

After the Court of Appeal had given its decision in Deny v. Peek (5), but
before it had been reversed by the House of Lords, a case came up for

determination at first instance on facts not materially distinguishable from

those of the present case. In Cann v. Willson (14). CHITTY, .J., relying on the
decision (then unreversed) of the Court of Appeal in Derry v. Peek (5), held
that the plaintiff could recover damages in respect of a negligent, but
(according to what we now know the word "fraud" means) non-fraudulent,

198
misrepresentation. This was the view implicitly condemned by the House of
Lords when Derry v. Peek (5) reached then, and Carm v. Willson (14) was,
consequently, on this assumption expressly overruled by the Court of Appeal
in Le Lievre v. Gould (7). As I have indicated, this last decision is binding on
this court and disposes of the appeal, in my view, unless it can be shown to
have been (a) overruled or (b) distinguishable.

I will deal with these points in turn, premising that the principle of which
Gould`s case (7} was decided was, in the words of LORD ESHER, M.R.
{[1893} 1 g.B.49S), this:
"All that he [the defendant] had done was to give untrue certificates
negligently. Such negligence, in the absence of contract with the
plaintiffs, can give no right of action at law or in equity."

Both he and Bowen, L.J., treated Derry v. Peek (5) as deciding not merely
that fraud was not established in L"1.at Case, but that nothing short of fraud
could in the circumstances of that case have given a cause of action, for
example, that negligent misrepresentation could not do so. This being so, the
first question is whether the principle laid down in Gould's case (7) has been
modified or overruled, either expressly or by necessary implication, by the
decision in any other case of superior authority. It has been qualified by
Nocton v: Ashburton (6) to this extent, that the passage cited above, after
the words "in the absence of contract with the plaintiffs" the further words' or
in some circumstances where a fiduciary relationship exists between the
defendant and the plaintiff' ought to be written in. Subject to this glass has it
been overruled? It has certainly not there been overruled expressly. Has it
then been overruled by necessary implication? Lord Atkin in Donoghue's case
(1) refers pointedly to Gould's case (7) in his speech, without a hint or a
suggestion that it was wrongly decided, or that the memorable formula
which he himself was propounding was inconsistent with it. As regards the
two minority judgments, one of them, that of Lord Buckmaster, also

199
mentions the case, and without disapproval. On the other hand, it is arguable
(though the argument does not carry conviction to my mind) that, whether or
not LORD ATKIN realised the fact or directed his mind to the question, the
formula which he laid down does, in fact. logically invalidate the principle laid
down and acted on in Gould`s case ('7). This contention must be squarely
faced. LORD ATKIN pointed out that the law governing the duty owed by A. to
B. in the absence of fraud, contract or fiduciary relationship has been b uilt
up piecemeal built up, if one may pursue the metaphor, in disconnected
slabs exhibiting no organic unity of structure. Certain classes owed duties of
care to certain other classes road users to other road users, bailees to
persons entrusting property to them, doctors and surgeon ( and originally
barbers) to persons entrusting their bodies to them, occupiers of promises to
person whom they invite or permit to come on the premises, and so on.
These categories attracting the duty had from time been added to and
substracted from. No attempt, however: had been made in the past to
rationalize them, to find a common denominator between road users,
bailees, surgeons, occupiers, and so on, which would explain why they
should be bound to a duty of care and some other classes who might be
expected equally to be so bound should be exempt no attempt, that is,
save that of SIR WILLIAM BRETT, M.R (from which his colleagues dissociated
themselves) in Heaven v. Pender (25). Yet, says LORD ATKIN, there must be
such a common denominator, or, at any rate, some general conception of
relations present in the cases in which a duty arises, and absent in cases in
which it does not.

Very tentatively ( and prefacing his observation with a warning that it might
go beyond the province of a judge to make such an attempt) he suggested
the formula which has now become classic, but which, nevertheless, it is
desirable here to quote afresh ([1932] A.C. 580):

200
 You must take reasonable care to avoid acts or omissions which you
can reasonably foresee would be likely to injure your neighbor. Who
then, in law, is my neighbor? The answer seems to be- person who are
so closely and directly affected by my act that I ought reasonably to
have them in contemplation as being so affected when I am directing
my contemplation as being so affected when I am directing my mind to
the acts or omissions which are called in question. This appears to me
to be the doctrine of Heaven v. Pender (25) as laid down by LORD
ESHER (then BRETT, M.R.) when it is limited by the notion of proximity
introduced by LORD ESHER himself and A. L. SMITH. L,J., IN Lievre v.
Gould (7)

This passage, if read literally and without regard to the qualifying effect of its
context or to the subjecta materies, might be taken to comprehend not only
conduct causing physical injury to person or property through setting a
certain kind of chattels in motion or in circulation (the case immediately
under review), but also conduct of any kind, through any means (including
negligent mis-statement) causing damnum of any kind recognised by the
law, whether physical or not, to anyone who could bring himself within Lord
Atkin's definition of a "neighbour".

I cannot believe so broad an application was intended by Lord Atkin himself.

The case may not decide quite so little as is contained in its somewhat
conservative headnote, which purports to confine it to the act of a
manufacturer launching into circulation a negligently manufactured chattel
which is calculated to injure and, in fact, injures the ultimate consumer or
user in circumstances in which neither he nor any intermediate party has a
reasonable opportunity of examining it. In fact, it has since been applied
somewhat outside this limited ambit: for instance to physical, injury caused
by negligent failure to repair a lift: Haseldine v, Daw (17), and a motor car:

201
Denny v. Supplies & Transport Co., Ltd. (29), or by the negligent adoption of
a system of working.It has,however, I think, never been applied where the
damage complained of was not-physical. Wrottesley J .. in Old Gate Estates v.
Toplis & Harding &. Russell (I8), held its application was limited to cases
where the injury was to life or limb. I think this is too narrow a view and that
physical injury to property may suffice, but it has never been applied to
injury other than physical. Apart, however, from any limitation which should
be read into Lord Atkin's language by reference to the facts of the case
before him - the subjecta materies - it seems to me incredible that if he
thought his formula was inconsistent with Gould's case (7), he would not
have said so.

This case, now nearly sixty years old, had at that time stood for nearly forty
years. He must have considered it closely. Yet his only reference to it is as
annexing a valid and essential qualification to SIR W. BRETT, M.R`s formula in
Heaven v. Pender (25), Not a word of disapproval of the decision on its
merits, The inference seems to me to be that Lord Atkin continued to accept
the distinction between liability in tort for careless (but non fraudulent)
misstatements and liability in tort for some other forms of carelessness, and
that his formula defining who is my neighbor must be read subject to his
acceptance of this overriding distinction.

Counsel for the plaintiff was unable to point to any clean decided case,
standin g unreversed, either before or after Donoghue`s case (1), in which
( always apart from fraud, contract and fiduciary relationship) A. had ever
been held liable to B. in damages for a careless misrepresentation. He
anchored, however, certain hopes on George v. Skivington (24) and on
certain observations of Lord Herschell in Derry v. Peek (5). I will say a word
now on each of these cases.

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George v. Skivington. (24), a decision "battered but unbowed," was in the
end vindicated by the House of Lords in Donoghue`s case (1). The case was
tried on demurer. The declaration averred, inter alia, that the defendant
carried on the bussiness of a chemist, and in the course of such business
professed to sell a chemical compound made of ingredients known only to
the defendant, and which he represented and professed to be fit and proper
to be used for washing the hair, which could and might be so used without
personal injury to the person using the same, and to have been carefully and
skillfully and properly compounded by him, the defendant: and thereupon
the plaintiff, Joseph George, bought of the defendant, and the defendant sold
to him at a certain price, a bottle of the said compound, to be used by the
plaintiff Emma for washing her hair, as the defendant then knew, and on the
terms that the same then was fit and proper aforesaid, without personal
injury to and had been skillfully, carefully, and properly compounded by the
defendant and that the wife suffered' consequent injury.

Thus, it was averred that the defendant put into circulation, knowing it was
intended to be used by the purchaser's wife. a negligently compounded and
deleterious hairwash. She used it, sustained physical injury, and an action
was brought by her or on her behalf, in which she succeeded on the issue
raised by the demurrer. So far the case is on all fours with Donoghue's case
(1) according to its narrowest interpretation, and it is not surprising that
Donoghue`s cas (1) affirmed it. The declaration, however, also averred

that the defendant had said the hairwash was safe. The present plaintiff,
basing himself on this last averment, contended that it an averment of
negligent mis-statement standing alone, would have evoked the same
decision, namely, that the facts averred amounted, if proved, to a good
cause of action. This I venture to doubt. It seems to me that the essence of
the decision resided in the averment of negligent compounding and setting
in motion by the defendant of a physical thing with knowledge that the

203
plaintiff would, or might, use the physical thing so compounded and with
resulting injury to the plaintiff and that the parallel between Donoghue's
case (l) and George v. Skivington (24) lay exclusively in these features.

Turning to the decision in Derry v. Peek (5), it is said that among decided
cases Derry v. Peek (5) also lends indirect support to the plaintiff`'s case.
This contention is based on a dictum of Lord Herschell who,in deciding that
the defendants were not liable for a non-fraudulent misrepresentation in
their prospectus, said (l4 App. Cas. 360) that he excluded from his purview
cases

Where a person within whose special province it lay to know a

particular fact, has given an erroneous answer to an inquiry made with
regard to it by a person desirous of ascertaining the fact for the
purpose of determining his course.

Here, again, is a statement which, if construed in its literal breath, might

seem to fit the present case. Lord Herschell's dictum was, however, later
interpreted both by the Court of Appeal in Low v. Bouverie (13) and later by
the House of Lords in Nacton v. Ashburton (6) ([19141 A.C. 950). It seems
clear from the latter case (in which the former was also considered and
affirmed) that Lord Herschel`s proposition has been held only to hold good
where (to use its terms) the " ... person within whose special province it lay
to know a particular fact. .. " occupies a contractual or fiduciary position vis-
a-vis the " ... person desirous of ascertaining the fact , .... " The cases which
had decided otherwise are one by one dismissed by VIscount Haldane, L.C ..
as defensible if at all only on some other ground-warranty, estoppel, or
whatnot. He affirms that liability for negligence in word has in material
respects been developed in our law differently from liability for negligence in
act. The cases which are cited in support of Lord Herschell's dictum are all
based, according to Lord Dunedin ([ 19141] A.C. 964).

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 upon the existence of a fiduciary relationship, and subsequently the
breach of duty arising

In what has gone before it has been assumed that the two law lords who
agreed with Lord Atkin's opinion or result, accepted the broad formula about
"my duty to my neighbour" which he laid down, as well as in the narrow
proposition limited to the liability of the negligent manufacturer of a chattel
which reaches the consumer without an opportunity of intermediate
examination and injures him. This assumption seems to me more than
questionable. Lord Thankerton, though he says ([1932] A.C. 604) that he
entirely agreed with Lord Atkin's discussion of the authorities, is clearly
considering the authorities in their application to the narrow ambit of a
manufacturer's liability, chattels and physical injury. His judgment does not
travel outside these limits. Nor do I read Lord Macmillan's judgment as
endorsing the wider proposition. There is a passage (ibid., 619) in which he
lays down certain general propositions. It would have been easy for him to
have adopted Lord Atkin's formula in terms if he had thught so broad a
proposition justified. When he says, however, in an oft-quoted phrase (ibid.):
'The categories of negligence are never closed" he is not, in my view,
accepting an acid test of liability valid in all circumstances. He does not
mention the word neighbour". He is merely saying that in accordance with
changing social needs and standards new classes of persons legally bound or
entitled to the exercise of care may from time to time emerge - in this case
by the addition of a careless manufacturer or circulator of a chattel, as
parties bound, vis-a-vis consumers or users, as parties entitled. In other
words, what Lord Macmillan envisaged was the addition of another slab to
the existing edifice, not a systematic reconstruction of the edifice on a single
logical plan. For these reasons I am of opinion that Donoghue's case (1)
neither reverses nor qualifies the principle laid down in Gould's case (7).

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If I am wrong in thinking Lord Atkin's formula was not accepted by the
majority of the house, there remains the question whether, assuming that
Gould's case (7) was well decided on its own facts, the facts of the present
case are not so far different as to justify and require a different conclusion.
The suggestion here is that the conclusion in Gould's case (7) could be
defended consistently with the principle of Donoghue's case (1) being
applicable to negligent misrepresentation, if in Gould's case (7) there was
insufficient "proximity" between the parties to attract the Donoghue

(1) Principle, and that a conclusion favourable to the plaintiff in the

present case could properly be reached on the ground that in the present
case there was sufficient proximity. The contention under this head is, in
other words, first, that Donoghue's case (1) overrules Gould's (7) so far as
the latter places careless mis-statements on a different and privileged level
as compared with some other forms of careless behaviour, but, secondly,
that the actual result of Gould's case (7) was right because the Donoghue (1)
principle required "proximity" as a condition of liability and there was in
Grould.'s case (7) no sufficient "proximity", and, thirdly, that this accounts
inter alia for Lord Atkin's omission to say that Gould's case (7) was wrongly
decided. This argument also seems to me invalid, The only difference, quoad
proximity, between the present case and Gould`s (7) is that in the present
case Mr. Fraser knew when he made his
representation the identity of the man who was likely to rely on his
representations, whereas Gould did not know this, He did not know that the
parties who were to make the advances were the mortgagees, the plaintiffs,
or at least, he did not know the contents of the mortgage deed. Consider,
however, what he did know. He knew before any mortgage was effected that
his certificates were required because advances were going to be made by
someone to the builder on the security of the work performed up to date as
vouched by his certificates. That someone could only be the building owner
or some other lender relying on the same security. I take the following

206
passage from the statement of facts ([1893] 1 Q.B. 493), premising that Hunt
was the owner of the land on which two houses were to be built. Lovering
was the builder, Dennes was the mortgagee who ultimately made advances,
and Le Lievre, the plaintiff, was Denned` assign.

"Hunt arranged with the plaintiff Dennes that he should advance the 850
to Lovering upon the security of a rnortgage from him. Hunt also agreed with
the defendant Gould, who was an architect and surveyor at Ilfracombe, that
he should give certificates from time to time that the work had reached the
respective stages at which the respective installments were to be advanced
as provided by the schedule of advances, a copy of which was given to the
defendant. This agreement with the defendant was made before the
execution of the mortgage ".""

On those facts, to say there was insufficient proximity in the Gould case (7)
seems to me wrong. LORD ATKIN, in affirming the Donoghue (1) type of
liability, and annexing to it the condition of proximity", did not say: "There is
no proximity unless the defendant can identify the ultimate victim of his
carelessness in advance." The manufacturers of the peccant bottle of ginger
beer had no idea who would in the end consume it. All they knew was that
someone would. You may adapt the formula "Certus est qui certus reddi
potest." The unidentifiability in advance of the ultimate consumer and victim
did not, by displacing the notion of proximity or in any other way, protect
them from liability. I am, therefor, of opinion, that this argument fails.

Singular consequences would follow if the principle laid down in Donoghue's

case (1) were applied to negligent rnisrepresentation in every case in which
the representee were proximate to the representor, The case has been
instanced by PROFESSOR WINFIELD in his textbook of law of Tort, 4th edn., p.
387, and referred to by Denning. L.J .. of a marine hydrographer who
carelessly omits to indicate on his map the existence of a reef. The captain of

207
the "Queen Mary." in reliance on the map and having no opportunity of
checking it by reference to any other map, steers her on the unsuspected
rocks, and she becomes a total loss. Is the unfortunate cartographer to her
owners in negligence for some millions of pounds damages? Yet what line
can be drawn between him and the defendants in the present case? If it be
said that there is no proximity between the cartographer and those for
whose use his map is designed, the reply surely is that there is just as much
as there was between the manufacturer of the peccant ginger beer and its
ultimate consumer.

In the present state of our law different rules still seem to apply to the
negligent mis-statement, on the one hand, and to the negligent circulation or
repair of chattels, on the other, and Donoghue's case (1) does not seem to
me to have abolished these differences. I am not concerned with defendant
the existing state of the law or contending that it is strictly logical. It clearly
is not - but I am merely recording what I think it is. If this relegates me to the
company of "timorous souls". I must face that consequence with such
fortitude as I can command. I am of opinion that the appeal should be
dismissed.

Cohen L. J.: The learned judge dismissed the plaintiff`s claim. He found no
fraud and from this part of his judgment the plaintiff does not appeal. He
also found that the only duty which the defendants owed to the plaintiff was
to produce accounts of the company. In other words, he found that they
owed no duty of care to the plaintiff. From that part of his judgment the
plaintiff appeals on two grounds. He says, First, that, since to the knowledge
of the defendants employees, Mr. fraser, the plaintiff was a prospective
investor in the company to assist him in reaching a decision whether to make
investment, the defendants, in accordance with the principles laid down by
Lord Atkin in Donoghue v. Stevenson (1) ([1932] A.C. 580) owed a duty to the
plaintiff, when giving him that information, to exercise care to see that it was

208
accurate. Secondly, he says that since the information given to the plaintiff
was inaccurate in material particulars owing to the negligence of the
defendants`s employee, Mr. Fraser, the defendants are liable in damages.
Alternatively, the plaintiff alleges that as he became a shareholder in the
company and the defendants were the auditors of the company, they owed a
duty to him as shareholder to give him the accurate information which they
should have given him when he was a prospective investor. This duty, he
says, was broken, and, accordingly, he is entitled to damages. So far as the
second ground is concerned, I entirely agree with the learned judge that no
damage flowed from the breach of such duty as is owed by the defendants
as auditors to the plaintiff as a shareholder. The $2,000 had been
irretrievably invested before the relationship had become operative. I would
add that I doubt whether the defendants` alleged duty as auditors extends to
cover information given to the plaintiff before he became a shareholder.

The first groung presents more difficulty, but despite counsel`s able and
lucid argument, I have come to the conclusion that we are bound by
authority to hold that the learned judge came to the right conclusion.
Counsel for the defendants submitted, first, that Mr. Fraser was not acting
within the scope of his employment in giving to the plaintiff information as to
the accounts, and, therefore, the defendants could not be liable for his
negligence in the preparation thereof. So far as this point is concerned, I
have nothing to add to the reasons given by my brethren for thinking that it
cannot be sustained. Secondly, he said that the principle of Donoghue v.
Stevenson (1) had never been applied to a case of
negligent mis- statement. A defendant could only be liable for negligent mis-
statement where there was a contractual nexus or a fiduciary relationship
between him and the plaintiff. In the absence of such a relationship the
decision in Derry v. Peek (5), as interpreted in Nocton v. Ashburton (6), is
says counsel, authority that no liability in negligence exists. This argument,
is I think, well-founded.

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In Donoghue v. Stevenson (1), and in all the other cases to which our
attention was called, the breach of duty alleged has been one which has
resulted in damages to the person of the plaintiff: see Haseldine v. Daw &
Son, Ltd. (17): Denny v. Supplies & Transport Co., Ltd (29). In Old Gate
Estates v. Toplis & Harding & Russell (18). Wrottesley, J., refused to apply the
principle of Donoghue v. Stevenson (1) to a case where a company had paid
too much for a property owing to an over-valuation by the defendants who
had been instructed by the promoters to value if for the purpose of the
promotion. The company, which was the plaintiff, was not formed at the time
of the valuation. Wrottesley, J., rejecting an argument based on Donoghue v.
Stevenson (1), said ([1939] 3 All E.R. 216):

The thing runs through these cases alike, however, both in those
applications of the principles and in the original case of Donoghue v.
Stevenson (1)itself, is that which was negligently created or put into
circulation was something which was dangerous either to life or limb-
those are, I think, the very the very words of Lords of Lord Atkin himself
and the other learned lords who delivered opinions, or the opinions of
the majority, in Donoghue v.Stevenson (1) or else was a thing which,
carelessly handled, carelessly made, or carelessly manded, would
become dangerous to life or limb or health. I think that today it is as
true as it was in 1893, when Le Lievre v. Gould (7) was decided, that,
to use the words of Bowen, L,J. (1893)1 Q.B. 520): It is idle to refer to
cases which were decided under totally different aspects, and upon
totally different considerations of the law. Take for example, the case of
an owner of a chattel, such as a horse, a gun, or a carriage, or any
other instrument, which is in itself of such a character that, if it be used
carelessly, it may injure some third person who is near to it; then it is
as plain as daylight that the owner of that chattel, who is responsible
for its management, is bound to be careful how he uses it. Exactly in

210
 the same way with regard to the owner of premises. If the owner of
premises knows that his premises are in a dangerous condition, and
that people are coming there to work upon them by his own permission
and invitation, of course he must take reasonable care that those
premises do not injure those who are coming there.' A little later
Bowen L.J., says (ibid.): How has it [the case of a certificate given by an
architect] any application to the present case? Only, I suppose, on the
suggestion that a man is responsible for what he states in a certificate
to any person to whom he may have reason to suppose that the
certificate may be shown. But the law of England does not go to that
extent: it does not consider that what a man writes on paper is like a
gun or other dangerous instrument, and, unless he intended to
deceive, the law does not, in the absence of contract, hold him
responsible for drawing his certificate carelessly. I think that is as true
today as it was when it was said by Bowen, L.J., and that there is
nothing in Donoghue v. Stevenson (1) which makes that bad law. The
exceptions laid down by Donoghue v. Stevenson (1) - the exceptions to
the rule that a man is obliged to be careful only to those to whom he
owes a duty by contract - are, as I understand the decision in that
case, confined to negligence which results in danger to life, danger to
limb, or danger to health, and, this being no one of those, I think that
the plaintiffs have no cause of action on the analogy of Donoghue v.
Stevenson (1)."

Counsel for the defendants submitted that these observations constituted a

correct statement of the law, at any rate if the words "or property" were
added after the words "or danger to health".

The question of liability for negligent mis-statement was also considered by

Devlin, J., in Heskell v. Continental Express, Ltd. (20), a case where through

211
carelessness a bill of lading had been issued for goods which had not been
shipped. Devlin, J., said ([1950] 1 All E.R. 1041):

In my' judgment, therefore. the plaintiff has not established any

contractual relationship with Strick giving rise to any particular duty
owing to him. In putting forward the wider proposition that Strick owed
a duty to the public not carelessly to circulate a document of title
,knowing it would be used as such, counsel for the plaintiff
acknowledged the difficulty he encountered because of Le Lievre v.
Gould (7), and other similar decisions which make it plain that
negligent mis-statement can never give rise to a cause of action."

Read literally, this statement is too wide, since negligent mis-statement can
give rise to a cause of action not only where there is a contractual
relationship, but also where there is a fiduciary relationship: see Nacton v.
Ashburtan (6); but with this limitation the statement is, in my opinion,
correct.

So far as I am aware, there is only one reported case involving negligent mis-
statement which supports the plaintiff's claim. That is the decision of Chitty,
J., in Cann v. Willson (14). In that case an intending mortgagor, at the request
of the solicitors of an intending mortgagee, applied to a firm of valuers for a
valuation of the property proposed to be mortgaged. A valuation at the sum
of 3,000 was sent in by the valuers direct to the mortgagee's solicitors, and
the mortgage was subsequently carried out. Default having been made in
payment by the mortgagor, and a loss having resulted to the mortgagee, he
commenced an action against the valuers for damages for the loss sustained
through their negligence, misrepresentation, and breach of duty. The court
being satisfied on the evidence that the defendants knew at the time the
valuation was made that it was for the purpose of an advance, and that the
valuation as made was in fact no valuation at all, it was held that, under the

212
circumstances, the defendants were liable on two grounds: (i) that they
(independently of contract) owed a duty to the plaintiff which they had failed
to discharge; (ii) that they had made reckless statements on which the
plaintiff had acted. If the first ground of decision was good law, it would
support the argument of counsel for the plaintiff, but the case was
considered by this court in Le Lievre v. Gould (7), and Lord Esher, M.R.,
Bowen and A.L. Smith, L.JJ., al agreed that Cann v. Willson (14) must be
treated as overruled by Derry v. Peek (5) .

The facts in Le Lievre v. Gould (7) differed somewhat from those in the
present case, but I do not think the court thought the differences material,
for Lord Esher, M.R., stated the problem with which the court was then faced
in the following terms ([1893] 1 Q.B. 496):

"Then it is said that, even If there was no contract between the plaintiff
Dennes and the defendant, nevertheless the defendant is liable to the
plaintiffs for having given certificates which contained untrue
statements; for, it Is said, the defendant owed a duty to the plaintiffs to
exercise care in giving the certificates, because he knew that the
plaintiffs would or might act upon then by advancing money to
Lovering."

Lord Esher, M.R., then proceeded to consider the problem. He treated

Heaven v. Pender (25), which was the foundation of Donoghue v. Stevenson
(1), as good law, saying (ibid., 497)

"If one man is near to another, or is near to the property of another, a duty
lies upon him not to do that which may cause a personal injury to that other,
or may injure his property. For instance, if a man is driving along a road, it is
his duty not to do that which may injure another person whom he meets on
the road, or to his horse or his carrriage."

213
He then considered Cann v. Willson (14). And said it was not good law, and
finally came to the conclusion that the action failed, saying,0 in the last two
or three lines of his judgment (ibid., 498}:
"Such negligence, in the absence of contract with the plaintiffs, can
give no right of action at law or in equity. All the grounds urged on
behalf of the plaintiffs fail, and the appeal must be dismissed.

Bowen and A.L. Smith, L.JJ., gave judgment to the same effect. I need not, I
think, refer to any passages in their judgments because I have referred to
the material passage in the judgment of Bowen, L.J ., where it was cited by
Wrottesley, J., in Old Gate Estates v.Toplis & Harding & Russell (18).

The principle of the decision in Le Lievre v. Gould (7) seems to me directly in

point in the present case. It is binding on us unless it can be said to be
inconsistent with some other decision of this court or of the House of Lords. I
am unable to find any such decision. Counsel asked us to say that it is
inconsistent with the principle laid down by Lord Atkin in Donoghue v.
Stevenson (1). It is to be observed that in Donoghue v.

Stevenson (1) Lord Atkin himself cited with approval some passages from the
judgments of Lord Esher, M.R., and A.L. Smith. L.J., in Le Lievre v. Gould (7),
and I am unable to believe that if he had thought the ratio decidendi in that
case was wrong he would have cited those passages without making it clear
that he was not approving the decision. I think, therefore, that, although the
passages in Lord Atkin's speech ([1932] A.C. 580. 581) are couched in such
general terms that they might possibly cover the case of negligent mis-
statement, that question was not present to Lord Atkin's mind or intended to
be covered by his statement.

214
Counsel for the plaintiff further submitted that Derry v. Peek (5) was purely a
case of fraud and did not touch the question of negligent mis-statement. It is
true that the cause of action in Derry J. Peek (5) was one of fraud, but it is, I
think, implicit in the speeches that their Lordships would have reached the
same conclusion had there been alternative plea of negligence. I am
fortified in this conclusion by the observations of two of their Lordships in
Nocton v. Ashburton (6). Viscount Haldane. L.C., examining the decision in
Derry v. Peek (5), says ([1914J A.C. 947):

"My Lords, the discussion of the case by the noble and learned Lords
who took part in the decision appears to me to exclude the hypothesis
that they considered any other question to be before them than what
was the necessary
foundation of an ordinary action for deceit. They must indeed be taken
to have thought that the facts proved as to the relationship of the
parties in Derry v. Peek (5) were not enough to establish any special
duty arising out of that relationship other than the general duty of
honesty."

Again, Lord Shaw cites with approval (ibid., 971) a passage from the
judgment of Bowen, L.J., in Low v. Bouverie (I3), where Bowen, L.J., says,
([1891] 3 Ch. 105):

'" .... Derry v. Peek (5) decides ... that in cases such as those of which
that case was an instance, there is no duty enforceable at law to be
careful in the representation which is made. Negligent
misrepresentation does not certainly amount to deceit, and negligent
misrepresentation can only amount to a cause of action if there exist a
duty to be careful - not to give information except after careful inquiry.
In Derry v. Peek (5)

215
 the House of Lords considered that the circumstances raised no such
duty. It is hardly necessary to point out that, if the duty is assuD1ed to
exist, there must be a remedy for its non-performance, and that
therefore the doctrine that negligent misrepresentation affords no
cause of action in confined to cases in which there is no duty, such as
the law recognises, to be careful. '"

Derry v. Peek (5) was a case where the action was founded on a false
statement in a prospectus, and I find it difficult to imagine a case where the
proximity test laid down by Lord Atkin in Donoghue u. Stevenson (1) would
more clearly be satisfied if the principle of that case is applicable to
negligent mis-statement. Counsel for the plaintiff submitted that there was a
distinction between Derry v. Peek (5) and the present case in that a
prospectus is issued to the world at large, whereas Mr. Fraser's statements
were addressed to the plaintiff in particular. This seems to me to be a
distinction without a difference in principle. For these reasons I think the
decision in Le Lieure v. GouLd (7) is still good law and is conclusive of the
present case.

I might, perhaps, add that the conclusion I have reached appears to accord
with the views of the text-book writers. The learned editor of Salmond on the
Law of Torts, 10th ed., p. 580, expresses the view that with certain
exceptions not material to the present case:

"A false statement is not actionable as a tort unless it is wilfully false.

Mere negligence in the making of false statement is not actionable
either as deceit or as any other kind of tort."

He regards the rule as anomalous. In Winfield's Textbook of the Law of Tort,

4th ed., pp. 386, 387, is expressed the author's dislike of it in more forcible
language, but he recognises that decisions of this court are definitely against

216
the existence of any action in tort for negligent statement. He thinks that it is
open to the House of Lords to take the contrary view. On this point I need
express no opinion. Before parting with the text-book writers, I ought,
perhaps, to mention that Dr. Charlesworth in his book on the Law of
Negligence, 2nd ed., p. 16, suggests an explanation of the alleged anomaly
in the rule. He says:

"The duty to take care is ultimately based on the possible

consequences which will occur if care is not taken. What the
consequences may be of any particular act or omission is often a very
difficult problem involving inquiry into questions of causation. This
inquiry is difficult enough in cases where physical damage is concerned
in which the cause, whether it be defective vehicles or machinery or
lack of care and skill in management, can usually be accurately traced.
To regard the issue of a certificate, an opinion, or a report as carrying
tile same duty of care as the delivery of a defective chattel would be to
introduce a most disturbing factor into the mutual intercourse of
society."
I do not find this explanation entirely satisfactory, but I am unable to suggest
a better one. Be that as it may, I am satisfied that on the authorities as they
stand we have no alternative but to dismiss this appeal.

Since writing this judgment my attention has been directed by Professor

Goodhart to an American case where a similar point was considered. The
case is ultramares Corpn. Touche (28). It has the merit that the decision of
the court was given by Cardozo, C.J. In that case the accountants had
certified the annual report of a company which, in order to finance its
operations, required extensive credit and borrowed large sums from banks
and other lenders. The facts are stated by the learned judge as follows (174
N.E. 442):

217
 "In January, 1924, the defendants, a firm of public accountants, were
employed by Fred Stern & Co .. Inc., to prepare and certify a balance
sheet exhibting the condition of its business as of Dec. 31, 1923. They
had been employed at the end of each of the three years preceding to
render a like service. Fred Stem & Co., Inc., which was in substance
Stem himself, was engaged in the importation and sale of rubber. To
finance its operations, it required extensive credit and borrowed large
sums of money from banks and other lenders. All this was known to the
defendants. The defendants knew also that in the usual course of
business the balance sheet when certified would be exhibited by the
Stem company to banks, creditors, stockholders, purchasers or sellers,

according to the needs of the occasion, as the basis of financial deal

ngs. Accordingly, when the balance sheet was made up, the
defendants supplied the Stern & Company with thirty-two copies
certified with serial numbers as counterpart originals. Nothing was said
as to the persons to whom these counterparts would be shown or the
extent or number of the transactions in which they would be used. In
particular there was no mention of the plaintiff, a corporation doing
business chiefly as a factor, which till then had never
made advances to the Stern company, though it had sold merchandise
in small amounts. The range of transactions in which a certificate of
audit might be expected to play a part was as indefinite and wide as
the possibilities of the business that was mirrored in the summary."

The court held that mere negligence did not make the defendant liable-to the
plaintiffs, who had made advances on the strength of the certified accounts,
though they, in fact, found that there was evidence of negligence by the
defendants in making their report. Cardozo. C.J., said (ibid., 444):

218
"We are brought to the question of duty, its origin and measure. The
defendants owed to their employer a duty imposed by law to make
their certificate without fraud, and a duty growing out of contract to
make it with the care and caution proper to their calling. Fraud includes
the pretence of knowledge when knowledge is none. To creditors and
investors to whom the employer exhibited the certificate, the
defendants owed a like duty to make it without fraud, since there was
notice in the circumstances of its making that the employer did not
intend to keep it to himself... A different question develops when we
ask whether they owed a duty to these to make it without negligence.
If liability for negligence exists, a thoughtless slip or blunder, the
failure to detect a theft or forgery beneath the cover of deceptive
entries, may expose accountants to a liability in an indeterminate
amount for an indeterminate time to -an indeterminate class. The
hazards of a business conducted on these terms are so extreme as to
enkindle doubt whether a flaw may not exist in

the implication of a duty that exposes to these consequences. We put

aside for the moment any statement in the certificate which involves
the representation of a fact as true to the knowledge of the auditors. If
such a statement was made, whether believed to be true or not, the
defendants are liable for deceit the event that it was false. The plaintiff
does not need the invention of novel doctrine to help it out in such
conditions. The case was submitted to the jury, and the verdict was
returned upon the theory that, even in the absence of a mis-statement
of a fact, there is a liability also for erroneous opinion. The expression
of an opinion is to be subject to a warranty implied by law. What, then,
is the warranty as yet unformulated, to be? Is it merely that the opinion
is honestly conceived and that the preliminary inquiry has been
honestly pursued, that a halt has not been made without a genuine
belief that the search has been reasonably adequate to bring

219
disclosure of the truth? Or does it go farther and involve the
assumption of a liability for any blunder or inattention that could fairly
be spoken of as negligence if the controversy were one between
accountant and employer for breach of a contract to render services
for pay? The assault upon the citadel of privity is proceeding in these
days apace. How far the inroads shall extend is now a favourite subject
of juridical discussion ... In the field of the law of contract there has
been a gradual widening of the doctrine of Laurence v. Fox (30) ... Until
today the beneficiary of a promise, clearly designated as such, is
seldom left without a remedy ... Even in that field; however, the
remedy is narrower where the beneficiaries of the promise are
indeterminate or general. Something more must then appear than an
intention that the promise shall redound to the benefit of the public or
to that of a class of indefinite extension. The promise must be such as
to 'bespeak the assumption of a duty to make reparation directly to the
individual members of the public if the benefit is lost' ... In the field of
the law of torts a manufacturer who is negligent in the manufacture of
a chattel in circumstances pointing to an unreasonable risk of serious
bodily harm to those using it thereafter may be liable for negligence
though privity is

lacking between manufacturer and user ... A force or instrument of

harm having been launched with potentialities of danger manifest to
the eye of prudence, the one who launches it is under a duty to keep it
within bounds... Even so, the question is still open whether the
potentialities of danger that will charge with liability are confined to
harm to the person, or include injury to property... In either view,
however, what is released or set in motion is a physical force. We are
now asked to say that a like liability attaches to the circulation of a
thought or a release of the explosive power resident in words."

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The learned judge then considers three case which were said to support the
plaintiff's action, and continues (ibid .. ; 447):

"From the foregoing analysis the conclusion is, we think inevitable that
nothing in our previous decisions commits us to a holding of liability for
negligence in the circumstances of the case at hand, and that such
liability. if recognised, will be an extension of the principle of those
decisions to different conditions, even if more or less analogous. The
question then is whether such an extension shall be made. The
extension, if made, will so expand the field of liability for negligent
speech as to make it nearly, if not quite, co-terminous with that of
liability for fraud. Again and again, in decisions of this court, the
bounds of this latter liability have been set up, with futility the fate of
every endeavour to dislodge them. Scienter has been declared to be
an indispensable element, except where the representation has been
put forward as true of one's own knowledge ... or in circumstances
where the expression of opinion was a dishonourable pretence ... Even
an opinion, especially an opinion by an expert, may be found to be
fraudulent if the grounds supporting it are so flimsy as to lead to the
conclusion that there was no genuine belief back of it. Further than
that this court has never gone. Directors of corporations have been
acquitted of liability for deceit, though they have been lax in
investigation and negligent in speech ... This has not meant, to be
sure, that negligence may not be evidence from which a trier of the
facts

May draw an inference of fraud but merely that, inference is

rejected, or, in the light of all the circumstances, is found to be
unreasonable, negligence alone is not a substitute for fraud. Many also
are the cases that have distinguished between the wilful or reckless
representation essential to the maintenance at law of an action for

221
 deceit, and the misrepresentation, negligent or innocent, that will lay a
sufficient basis for rescission in equity .. . If this action is well
conceived, all these principles and distinctions, so nicely wrought and
formulated, have been a waste of time and effort. They have even
been a snare, entrapping litigants and lawyers into an abandonment of
the true remedy lying ready to the call. The suitors thrown out of court
because they proved negligence, and nothing else, in an action for
deceit, might have ridden to triumphant victory if they had proved the
self-same facts, but had given the wrong another label, and all this in a
state where forms of action have been abolished. So to hold is near to
saying that we have been paltering with justice. A word of caution or
suggestion would have set the erring suitor right. Many pages of
opinion were written by judges the most eminent, yet the word was
never spoken. We may not speak it now."

The final passage which I wish to read is this (ibid., 448)

"Liability for negligence if adjudged in this case will extend to many

callings other than auditors. Lawyers who certify their opinion as to the
validity of municipal or corporate bonds, with knowledge that the
opinion will be brought to the notice of the public, will become liable to
the investors, if they have overlooked a statute or a decision, to the
same extent as if the controversy were one between client and adviser.
Title companies insuring titles to a tract of land, with knowledge that at
an approaching auction the fact that they have insured will be stated
to the bidders, will become liable to purchasers who may wish the
benefit of a policy without payment of a premium. These illustrations
may seem to be extreme, but they go little, if any, farther than we are
invited to go now. Negligence, moreover, will have one standard

222
 when viewed in relation to the employer, and another and at times a
stricter standard when viewed in relation to the public. Explanations
that might seem plausible, omissions that might be reasonable, if the
duty is confined to the employer, conducting a business that
presumably at least is not a fraud upon his creditors, might wear
another aspect if an independent duty to be suspicious even of one's
principal is owing to investors. Everyone making a promise having the
quality of a contract will be under a duty to the promise by virtue of
the promise, but under another duty, apart from contract, to an
indefinite number of potential beneficiaries when performance has
begun. The assumption of one relation will mean the involuntary
assumption of a series of new relations, inescapably hooked
together' ... The law does not spread its protection so far Our holding
does not emancipate accountants from the consequences of fraud. It
does not relieve them if their audit has been so negligent as to justify a
finding that they had no genuine belief in its adequacy, for this again is
fraud. It does no more than say that, if less than this is proved, if there
has been neither reckless mis-statement nor insincere profession of an
opinion, but only honest blunder, the ensuing liability for negligence is
one that is bounded by the contract, and is to be enforced between the
parties by whom the contract has been made. We doubt whether the
average business man receiving a certificate without paying for it, and
receiving it merely as one among a multitude of possible investors,
would look for anything more."

I am glad, therefore, to find that the conclusion which I have reached on the
basis of the English authorities seems to accord with the opinion of so
eminent a student of the common law as Cardozo, Cz.J. I would only add
that, despite the observations of Denning. L.J., I do not think the conclusion I
have reached will encourage accountants to fall short of the high standard of

223
conduct which the institutes to which they belong have laid down for their
members. In the result, this appeal will be dismissed.

Appeal dismissed with costs.

Solicitors: Edwin Coe & Calder Woods (for the plaintiff); Ashurst, Morris Crisp
& Co. (for the defendant's).

[Reported by C.N. Beattie, ESQ., Barrister-at-law]

224
 (L) CLAYTON v . WOODMAN &: SON (BUILDERS) LTD

[1962] 2 QB 533 at 537-547

July 5. SALMON J, read the following ju dgment: In 1958 the second

defendants, tile South Western Regional Hospital Board, were minded to
instal a lift in the Wonford House Hospital at Exeter. They accordingly
instructed the third defendants, a firm of architects, to prepare a
specification and working drawings for the construction of a lift shaft and
motor-room. When the specification and drawings had been prepared
tenders were invited and ultimately the first defendants, who were builders,
entered into a written contract with .the second defendants dated
September 12, 1958. This contract was in the appropriate R.I.B.A. form.

The Wonford House Hospital was built about a hundred years ago in the
Gothic style. A stone gable about 7 or 8 feet wide projected about 8 feet
above the roof close to the side of the proposed lift shaft. This gable had at
one time carried a bell, but long before 1958 the bell had been removed. The
gable wall was 2 feet thick and had a filling of rough rubble or lightly bound
loose stones. This filling was contained by a "skin" of blue limestones of
various sizes on the outer side, and a "skin" of stones and random rubble
facing on the inner side of the gable. This is the usual construction for all
similar walls and should have been well known to any builder or architect.
The amount of filling varies from case to case as does the thickness of the
"skins". The skin" on the inner side of this gable wall was somewhat thinner
than usual, but I find that the gable was properly and safely constructed. and
in no way dangerous until the chase, to which I will presently rafer, had been
cut in it by the first defendants. The specification and drawings called for
demolition of part of the roof adjacent to the gable so that a motor-room

225
might be built there and there gable incorporated into the wall of the motor-
room.

By January 15, 1959, the lift shaft had been constructed inside the building
and the appropriate portions of the roof had been removed. The reinforced
concrete floor of the motor-room remained to be laid, and the brick walls
(one of which would incorporate the gable) constructed, and ultimately a
concrete roof added. The drawings and specification made it plain that
before the floor was laid a chase or groove would have to be cut into the side
of the gable. since the concrete floor was to be supported in

the walls of the motor-room. The brick walls above the floor were to be
constructed after tile floor had been laid. Unless, however, a chase were cut
at the floor level along the side of the gable, which was to form part of the
inner wall of the motor-room, the floor would be unsupported for a length of
about 7 feet. The cutting of a chase in the gable wall would necessarily so
weaken it that, if left unsupported, it would fall and injure anyone working
near-by. This should have been obvious to any competent builder or
architect. There has been some conflict of evidence as to whether shoring or
strutting was necessary or likely to have been effective, but I find that it was
unsafe to cut the chase without shoring or strutting the gable, and that if the
gable had been properly strutted or shored, the chase would have been cut
without any real danger of the gable falling.

On the morning of January 15, 1959, the plaintiff, who was a senior bricklayer
in the first defendants' employ, was on the site with another bricklayer. After
some conversation with Berry, a qualified architect in the employ of the third
defendants, to which conversation I shall presently have to refer in some
detail, the plaintiff told the other bricklayer to cut the chase in the gable wall
on its inner side, and he did so. The chase was about 3 inches square, and
was completed by 1 p.m. No strutting or shoring was erected. An employee

226
of the first defendants. Lord, who was in charge of the work on their behalf,
arrived at the site at about 4 p.m. and had a conversation with the plaintiff
on the scattolding close to the gable. Shortly afterwards the plaintiff was
cutting into a stone on one side of the gable when, after cutting out a piece
of stone about the size of a walnut, the whole gable toppled inwards and fell
seriously injuring the plaintiff and the other bricklayer. It was suggested that
the fall was triggered off by the action of the plaintiff himself, but even if this
be so (and I am far from satisfied that it is). it seems to me to be immaterial.
I have no doubt that the gable was so weakened by the chase that it became
most unsafe and, unless supported by strutting or shoring, would inevitably,
without any further interference, have fallen within a short time of the chase
being cut.

The plaintiff originally brought this action against the first defendants alone,
claiming that the injury and damage which he suffered were caused by their
negligence or breach of statutory duty. Having regard to the allegations
made in the defence of the first defendants, the plaintiff joined the second
and third defendants, It will be convenient to consider the case against each
of the defendants separately.

In my view, the first defendants have no defence to this action. It was their
duty as the plaintiffs employers to take reasonable care for his safety. They
knew that the work had reached a stage when a chase was about to be cut in
the gable. They should have appreciated that this would be a ighly
dangerous operation unless the gable were supported by strutting or shoring,
but they allowed this work to be carried out without any such strutting or
shoring. Lord was an exceptionally frank witness. He has many years
experience and is familiar with the normal construction of stone walls and
the danger of cutting chases in them without strutting or shoring. I have no
doubt that he is usually a very careful man and takes all necessary
precautions for the safety of workmen under his control. On this occasion,

227
however, he never applied his mind to the question, and he frankly admits
that he should have done so. In my judgment, the first defendants were
clearly negligent in that they did not shore or strut this wall when they knew
that the chase was abou't to be cut in it. This negligence was a cause of the
accident.

They are also liable under regulation 94 (2) of the Building (Safety, Health,
and Welfare) Regulations. [His Lordship read the regulation and continued:]
The statutory duty cast upon the first defendants does not, however, in the
circumstances of this case, differ, in my view, from the duty of care imposed
upon them under the common law. The first defendants have rightly made
no allegation of contributory negligence against the plaintiff, for the plaintiff
is by trade a bricklayer and not a stonemason, and did not know and had no
reason to suspect that the cutting of a chase without shoring or strutting was
likely to render the wall unsafe.

The plaintiff was clearly an invitee of the second defendants, and his claim
against them in based on alleged breaches of their duty as occupiers to take
reasonable care for his safety. The plaintiff contends that the second
defendants are vicariously liable for the negligence of their architects, the
third defendants. In my judgment this contention is scarcely arguable. It is
true that for certain purposes an architect is the agent of the building-owner.
e.g., for the purpose of ordering materials:

Wallis v. Robinson.68 Nevertheless, an architect is clearly an independent

contractor. The building owner has no control over the manner in which the
architect does his work (indeed, for certain purposes the architect is in the
position of a quasi-arbitrator). Accordingly, providing that the building-owner
engages an architect whom he reasonably believes to be competent, he is
not in general responsible for the architect's negligence. When the second
defendants engaged the third defendants they lightly believed the third

228
defendants to be competent architects of high repute. Accordingly, the
second defendants cannot be vicariously, liable for any negligence on the
part of the third defendants.

An argument was also addressed to me on the basis that quite apart from
vicarious liability, the second defendants are liable under the Occupiers
Liability Act, 1957. I must confess that I found this argument very difficult to
follow. The gable was perfectly safe at the time when the architects and
builders were called in. The second defendants wanted this gable
incorporated in a wall of the proposed motor-room if this could safely be
done, but whether the gable could be retained, and, if so, how this should be
done, was essentially a technical matter for the architects and builders to
decide, and very sensibly the second defendants left this matter to them. I
am quite unable to find that the second defendant in any way failed in their
duty of care to their invitees.

The claim against the third defendants raises a point of law of considerable
importance and no little difficulty. The contract of September 18, 1958,
between the first and second defendants called for completion by December
l, 1958. The third defendants' letter of January 9, 1959, makes it plain that
the date of completion was postponed, but that it was agreed that the roof
should be completed and the lift shaft clear by February 1959. The opening
words of clause 1 of the contract provide that "The "contractor shall carry out
and complete the works in "accordance "with this contract and in every
respect in accordance with the "directions ... of the architect." The
specification also provides that "the works are to be carried out in strict
accordance" with the drawings and specification and with the instructions"
given by the architect from time to time during the "progress of the works."

229
 68. (1862) 3F. &
F. 307

Mr. Lyell, in the course of his most able argument on behalf of the third
defendants, submitted that the wide meaning of the words in the
specification and of the opening words in clause 1 of the contract is cut down
by what follows in clause 1, so that the architect can give instructions only in
relation to the matters specified in clause 1. These,
however, include instructions in relation to "The variation or modification
of the design ... or "the addition or omission or substitution of any work and
the "postponement of any work. ... "

On the morning of January 15. 1959, Berry visited the site for the purpose,
amongst other things, of examining the gable, which he had not previously
done. He had to decide whether it was safe to incorporate it in the wall of the
motor-room in accordance with the specification and design, or whether it
should be demolished. The plaintiff was clearly anxious that the design and
specification should be modified by eliminating the gable, partly because of
the difficulty he felt in marrying the brickwork to the stone gable, and partly
because he had heard a rumour, in my view unfounded, that the gable was
then unsafe. I am quite satisfied that he asked Berry if the gable might be
demolished, and urged the difficulty and the rumour to which I have referred
as reasons for this modification. Berry explained to the plaintiff how in his
view the brickwork could be married to the stone gable, and intimated that
he was satisfied that the gable was safe and must be retained as part of the
motor-room wall in accordance with the design and specification. He does
not remember that part of the conversation relating to safety, but I accept
the plaintiffs recollection on this matter. Berry knew that the motor-room had
to be completed by February 1. 1959, and that it had reached the stage on

230
January 15. 1959. when the chase was about to be cut in the gable. I find
that during the conversation to which I have referred. Berry, as he admitted,
in effect instructed the plaintiff to carry on and cut the chase. He admitted
also that he knew that the chase would" be cut that day without shoring or
strutting. He took the view, and still does, that it was unnecessary to shore
or strut. In this he was mistaken. There are, of course, many mistakes that a
professional man can make without failing to exercise reasonable skill or
care, but not an elementary mistake of this kind. I have no doubt at all that
any ordinary architect using reasonable care and skill would certainly have
realised the extreme danger of cutting the chase without shoring or strutting
the gable. Berry said that he assumed that the chase would be cut in small

Sections, each section being chocked before the next section was cut. I do
not believe that this method would have substantially reduced the danger of
the gable falling or that any reasonably careful and competent architect
would have thought so. Moreover, I very much doubt whether any such
thought passed through Berry's head at the time on January 15, 1959. A
chase had been cut in the chimney wall which was to be incorporated in
another wall of the motor-room. There was the open chase in the chimney
wall for Berry to see, and a mere glance would have shown that no chocks
had been used in cutting that chase. Berry's recollection was that on January
15. 1959, he thought that the plaintiff was a foreman stonemason. I do not
accept his recollection, for the plaintiff was obviously on the site as a
bricklayer.

Mr. Lyell submitted that the third defendants had no right to instruct the first
defendants as to either the manner in which the work was to be done or the
safety precautions to be taken. He contended that the form of specification
and contract make it plain that it was for the first defendants to decide what
safety precautions were necessary and to make provision for them in their
tender. He further submitted that there was ho contractual nexus between

231
the architects and the builders, and that the law imposes no duty upon the
architect to advise the builders or their servants about their safety. So far as
the law is concerned, Berry would be within his rights were he to stand by
and without protest or warning watch the plaintiff doing something which
Berry knew to be highly dangerous. Still less could Berry be liable if through
lack of care or knowledge he failed to appreciate the risks involved in the
plaintiffs act.

I agree substantially with all those submissions. I further agree that had the
third defendants issued instructions direct to the first defendants to cut the
chase, and as a result of those instructions being obeyed, the plaintiff had
been injured, the third defendants would have been under no liability to him.
The first defendants would in such circumstances have been interposed
between the instructions and the doing of the work, and the proximity
between the plaintiff and the third defendants would not have been
sufficiently close to impose any duty of care upon them. But the instructions
were in fact given direct to the plaintiff. They concerned a subject-matter,
the cutting of the chase, about which, as between the third defendants and
the second defendants, the third defendants had a duty to decide, and as
between the third defendants and the first

Defendants, the third defendant had to issue instructions. The architect

chose to give the instructions direct to the bricklayer, who had no reason to
suspect that any danger was involved. The architect certainly knew that
these instructions would be promptly obeyed, and equally certainly should
have realised that in the existing circumstances they would probably lead to
the bricklayer's serious injury or death. Having regard to the exceptionally
close relationship between the architect and the bricklayer on the particular
facts of this case, the law to my mind imposed a duty on the architect to take
reasonable care for the safety of the bricklayer. Had he exercised any such
care, he would not have issued the instructions.

232
In Donoghue v. Stevenson 69 Lord Atkin laid down the celebrated
principle70: "You must take reasonable care to avoid acts
or omissions which you can reasonably foresee would be likely

to injure your neighbuor. Who, then, in law is my neighbor?

The answer seems to be persons who are so closely and directly

"affected by my act that I ought reasonably to have them in

"contemplation as being so affected when I am directing my

mind to the acts or omissions which are called in question

Can anyone doubt that the bricklayer was so closely and directly affected by
the instructions that the architect ought to have 'had him in contemplation
as being so affected when the architect was directing his mind to the
instructions? In the 'same case Lord Macmillan said71:

"What, then, are the circumstances

which give rise to this duty to take care? In the daily contacts

of social and business life human beings are thrown into, or

place themselves in, an infinite variety or relations with their

fellows; and the law can refer only to the standard of the

reasonable man in order to determine whether any particular

233
relation gives rise to a duty to take care as between those

stand in that relation to each other. The grounds of action may

of legal responsibility may develop in adaptation to altering

social conditions and standards. The criterion of judgement must

adjust and adapt itself to the changing circumstances of life

"The categories of negligence are never closed." Can anyone doubt that the
reasonable man would conclude that the particular relation between this
architect and this bricklayer gave rise to a duty to take care?

Mr. Lyell submitted that the instructions amounted to no more than a

statement, and that in law a careless as distinct from a fraudulent statement
is not actionable in the absence of a contractual or fiduciary relationship
between the parties, for in the absence of such a relationship there is no
duty to take care, and in the absence of such a duty there can be no
actionable negligence, He relies upon the well-known cases of Derry v.
Peek,72 Le Lieure v. Goul.d73 and Candler v. Crane, Christmas & Co. 7 4

On the whole I have come to the conclusion that those authorities are not in
point, for in my View orders and instructions are different in their nature from
mere staten1ents or representations. To make a statement or representation
believing that someone will probably act upon it is not, in my view,
equivalent to issuing orders or instructions which you know will certainly be
obeyed. But even if this distinction be not valid, in my judgment the third
defendants were still under a duty of care to the plaintiff. It is to be observed
that Donoghue v. Steverison75 has frequently been applied, but only where

234
the damage complained of was physical ,that is, to persons or property. See
Haseldine v. C.A. Daw & Son Ltci76 and Denny v. Supplies & Transport Co.
Ltd. 77 On the other hand, in Deny v. Peek,78 Le Lievre v. Gould79 and
Candler v. Crane. Christmas & Co.80 the damage complained of was not
physical but financial. May it be that the latter cases can be read as
authorities for excluding from the ambit of Donoghue v. Stevenson81 only
careless misstatements resulting in financial loss, but not those causing
physical damage?

It appears from the judgment of Denning L.J. in Candler v. Crane, Christmas

& Co.82 that it was not seriously disputed by the respondents in that case
that a careless statement resulting in physical damage to persons or
property is actionable. Asquith L.J., however. appears to have taken a
different view, for the said83: "The inference seems to me to be that Lord
Atkin

continued to accept the distinction between liability in tort for

careless (but non-fraudulent) misstatements and liability in tort

for some other forms of carelessness, and that his formula

defining who is my neighbor must be read subject to his

"acceptance of this overriding distinction". In the same sense are. Asquith

L.J.'s references84 to George v. Skivington.85 On the other hand, he did
appear to find support for the decision at which he arrived from the fact that
the formula in Donoghue v. Stevenson86 "has never been applied to injury
other than "physical".87 Cohen L.J. expressed no concluded view, as to
whether a careless misstatement resulting in physical damage might be
actionable, but he did cite,88 apparently with approval, the following

235
passage from the judgment of Wrottesley J. in Old Gate Estates Ltd. v.
Toplis89 "The exceptions laid down "by Donoghue v. Stevenson 90" - the
exceptions to the rule that a man is obliged to be careful only to those to
whom he owes a duty by contract - "are, as I understand the decision,
confined to negligence which results in damage to life, danger to limb, or
danger to health, and, the present case not being one of thoseexceptions,
the plaintiff have, in my opinion, no cause of action on the analogy of'
Donoghue v. Stevenson.91 The inference seems to be that had the case
been one of those exceptions, Wrottesley J. would have concluded that there
was a cause of action notwithstanding that the claim was based on a
careless misstatement.

Although the dicta of Asquith L.J. must carry the greatest weight, I do not
consider that the decision in Candler v. Crane. Christmas & Co.92 excludes
careless statements causing physical damage from the ambit of Donoghue v.
Stevenson.93 It may be difficult to think of a logical reason why there should,
in some circumstances, be a duty to take care in making a statement
causing physical damage, but never such a duty in making a statement
causing only financial loss. Logic and common sense, however, are uncertain
guides in this branch of the law, and the distinction between the two classes
of' careless misstatement n1ay have its roots in the historical development
of the law of torts.

Asquith L.J., at the conclusion of his judgment in Candle v. Crane, Christmas

& Co., said94: "I am not concerned with "I think it is." Clearly there is no
logical distinction between liabil1ty for careless misstatements and liability
for other forms of carelessness. Indeed, it is obvious that where there is the
closest proximity between parties concerned, the financial loss caused by a
careless misstatement may have catastrophic consequences for the person
to whom it is made, whereas in cases such as that of the snail in the ginger-
beer bottle (had it been there) the damage resulting from the careless act

236
may be comparatively trivial "It is curious and perhaps logically indefensible
that the law affords a remedy in the latter case but not in the former. Yet so it
is, for some forms of careless misstatement are clearly excluded by the
existing authorities from the ambit of Donoghue v. Stevenson95 however
close the degree of proximity between the parties concerned. I read the
authorities as excluding not all forms of careless misstatement, but only
those resulting in financial loss. I accept that this view adds illogicality to
illogicality, but that seems to me to be preferable to enlarging the class of
those to whom a remedy is unjustly denied. The decision in Candler,.v.
Crane, Christmas & Co.96 rests soley on the narrow ground that Le Lievre u.
Gould,97 was not overruled by Donoghue v. Stevenson98 and is still binding
on the Court of Appeal.

I reach the conclusion that since neither Le Lieure v. Gould.99 nor Candler v.
Crane, Christmas & Co.100 was concerned with a careless statement causing
physical damage, they cannot exclude the application of the principle
enunciated in Donoghue v. Stevenson 101 to the particular facts of the
present case. Applying that principle, I hold that Berry was under a duty to
the plaintiff to use reasonable care, that he failed in that duty and that his
negligence was a cause of the plaintiffs damage. There will, accordingly, be
judgment for the plaintiff against the first and third defendants for the
agreed sum of 2,352 l0s, 9d., and judgment for the second defendants
against the plaintiff.

Judgement for the plaintif against the first and third defendants.

Solicitors: O.H. Parsons; Stanley & Co.; Bevan, Hancock & Co., Bristol;
Sydney Redfern & Co.

On appeal by the architects, the court of Appeal 102 allowed the appeal
holding that the evidence did not justify the judge's finding that the architect

237
had instructed the plaintiff to do anything which he knew to be dangerous. or
that he had acted negligently, as he had given no direct order but had
merely decided not to vary the contract and made a statement to that effect;
that accordingly, responsibility for the accident rested solely on the builders,
whose duty it was to ensure that the chase was cut without unnecessary risk
to the plaintiff.

Reporter's note. Liability was apportioned equally between the first and third
defendants.

238
(M) HADLEY BRYNE & CO LTD V HELLER & PARTNERS LTD

May 28. LORD REID. My Lords, this case raises the important question
whether and in what circumstances a person can recover damages for loss
suffered by reason of his having relied on an innocent but negligent
misrepresentation. I cannot do better than adopt the following statement of
the case from the judgment of McNair J.: 'This case raised certain interesting
questions of law as to the liability of bankers giving references as to the
credit-worthiness of their customers. The plaintiffs are a firm of advertising
agents. The defendants are merchant bankers. In outline, the plaintiffs' case
against the defendants is that, having placed on of a client, Easipower Ltd.,
on credit terms substantial orders behalf for advertising time on television
progrmmes and for advertising space in certain newspapers on terms under
which they, the plaintiffs, became personally liable to the television and
newspaper companies, they caused inquiries to be made through their own
banks of the defendants as to the credit-worthiness of Easipower Ltd. who
were customers of the defendants and were given by the defendants
satisfactory references.

These references turned out not to be justified, and the plaintiffs claim that
in reliance on the references, which they had no reason to question, they
refrained from cancelling the orders so as to relieve themselves of their
current liabilities."

[His Lordship stated the facts and continued:] The appellants now seek to
recover this loss from the respondents as damages on the ground that these
replies were given negligently and in breach of the respondents duty to
exercise care in giving them. In his judgment McNair J. said: "On the
assumption stated above as to the existence of the duty, I have no hesitation

239
in holding (1) that Mr. Heller was guilty of "negligence in giving such a
,reference without making plain - as he did not - that it was intended to be a
very guarded reference, and (2) that properly understood according to its
ordinary and natural meaning the reference was not justified by facts known
to Mr. Heller. II

Before your Lordships the respondents were, anxious to contest this finding,
but your Lordships found it unnecessary to hear argument on this matter,
being of opinion that the appeal must fail even If Mr. Heller was negligent.
Accordingly I cannot and do not express any opinion on the question whether
Mr. Heller was in fact negligent But I should make it plain that the appellants'
complaint is not that Mr. Heller gave his reply without adequate knowledge of
tile position, nor that he intended to create a false impression, but that what
he said was in fact calculated to create a false i1npression and that he ought
to have realised that. And the same applies to the respondents letter of
November II.

McNair J. gave judgement for the respondents on the ground that they owed
no duty of care to the appellants. He said: "I am accordingly driven to the
conclusion by authority binding, upon me that no such action lies in .the
absence of contract or fiduciary relationship. On the facts before me there is
clearly no contract, nor can I find a fiduciary relationship. It was
urged on behalf of the plaintiff that the fact that Easipower Ltd. were heavily
indebted to the defendants and that the "defendants might benefit from the
advertising campaign financed by the plaintiffs, were facts from which a
special duty to exercise care might be inferred. In my judgment, however
these facts, though clearly relevant on the question of honesty if this had
been in issue, are not sufficient to establish any special "relationship
involving a duty of care even if it was open to me to extend the sphere of
special relationship beyond that of contract and fiduciary relationship."

240
This judgment was affirmed by the Court of Appeal both because they were
bound by authority and because they were not satisfied that it would be
reasonable to impose upon a banker the obligation suggested.

Before coming to the main suggestion of law, it may be well to dispose of an

argument that there was no sufficiently close relationship between these
parties to give rise to any duty. It is said that the respondents did not know
the precise purpose of the inquiries and did not even know whether the
National Provincial Bank wanted the information for its own use at for the use
of a customer: they knew nothing of the appellant I would reject that
argument. They knew that the inquiry was in connection with an advertising
contract, and it was at least probable that the information was wanted by the
advertising contractors. It seems to me quite immaterial that they did not
know who these contractors were: there is no suggestion of any speciality
which could have influenced them in deciding whether to give information or
in what form to give it. I shall therefore treat this as if it were a case where a
negligent misrepresentation is made directly to the person seeking
information, opinion or advice, and I shall not attempt to decide what kind or
degree of proximity is necessary before there can be a duty owed by the
defendant to the plaintiff.

The appellants' first argument was based on Donoghue v. Stevenson. 103

That is a very important decision, but I do not think that it has any direct
bearing on this case. That decision may encourage us to develop existing
lines of authority, but it cannot entitle us to disregard them. Apart altogether
from authority, I would think that the law must treat negligent words
differently from negligent acts. The law ought so far as possible to reflect the
standards of the reasonable man, and that is what Donoghue v. Stevenson
sets out to do. The most obvious difference between negligent words and
negligent acts is this. Quite careful people often express definite opinions on
social or informal occasions even when they see that others are likely to be

241
influenced by them; and they often do that without taking that care which
they would take if asked for their opinion professionally or in a business
connection. The appellant agrees that there can be no duty of care on such
occasions, and we were referred to American and South African authorities
where that is recognised, although their law appears to have gone much
further than ours has yet done. But it is. at least unusual casually to put into
circulation negligently made articles which are dangerous. A mall might give
a friend a negligently-prepared bottle of home-made wine and his friend's
guests might drink it with dire results. But it is by no means clear that those
guests would have no action against the negligent manufacturer.

Another obvious difference is that a negligently made article will only cause
one accident, and so it is not very difficult to find the necessary degree of
proximity or neighbourhood between the negligent manufacturer and the
person injured. But words can be broadcast with or without the consent or
the foresight of the speaker or writer. It would be one thing. to say that the
speaker owes a duty to a limited class, but it would be going very far to say
that he owes a duty to every ultimate "consumer" who acts on those words
to his detriment. It would be no use to say that a speaker or writer owes a
duty but can disclaim responsibility if he wants to. He, like the manufacturer,
could make it part of a contract that he is not to be liable for his negligence:
but that contract would not protect him in a question with a third party, at
least if the third party was unaware of it.

So it seems to me that there is good sense behind our present law that in
general an innocent but negligent misrepresentation gives no cause of
action. There must be something more than the mere misstatement. I
therefore turn to the authorities to see what more is required. The most
natural requirement would be that expressly or by implication from the
circumstances the speaker or writer has undertaken some responsibility, and
that appears to me not to conflict with any authority which is binding of this

242
House. Where there is a contract there is no difficulty as regards the
contracting parties: the question is whether there is a warranty. The refusal
of English law to recognise any jus quaesitum tertii causes some difficulties,
but they are not relevant, here. Then there are cases where a person does
not merely make a statement but performs a gratuitous service. I do not
intend to examine the cases about that, but at least they show that in some
cases that person owes a duty of care apart from any contract and to that
extent they pave the way to holding that there can be a duty of care in
making a statement of fact or opinion which is independent of contract.

Much of the difficulty in this field has been caused by Derry v. Peek. 1 04 The
action was brought against the directors of a company in respect of false
statements in a prospectus. It was an action of deceit based on fraud and
nothing else. But it was held that the directors had believed that their
statements were true although they had no reasonable grounds for their
belief. The Court of Appeal held that this amounted to fraud in law, but
naturally enough this House held that there can be no fraud without
dishonesty and that credulity is not dishonesty. The question was never
really considered whether the facts had imposed on the directors a duty to
exercise care. It must be implied that on the facts of that case there was no
such duty. But that was immediately remedied by the Directors' Liability Act,
1890, which provided that a director is liable for untrue statements in a
prospectus unless he proves that he had reasonable ground to believe and
did believe that they were true.

It must now be taken that Deny D. Peek did not establish any universal rule
that in the absence of contract an innocent but negligent misrepresentation
cannot give rise to an action. It is true Lord Bramwell said105: "To found an
action for damages "there must be a contract and breach, or fraud." And for
the next 20 years it was generally assumed that Derry v. Peekl06 decided
that. But it was shown in this house in Nocton v. Lord Ashburtanl07 that that

243
is much too widely stated. We cannot, therefore, now accept as accurate the
numerous statements to that effect in cases between 1889 and 1914, and
we must now determine the extent of the exceptions to that rule.
In Nocton v. Lord Ashburton a solicitor was sued for fraud. Fraud was not
proved but he was held liable for negligence. Viscount Haldane L.C. dealt
with Derry v. Peek and pointed out that while the relationship of the parties
in that case was not enough, the case did not decide "that where a different
sort of relationship ought to be inferred from the circumstances the case is to
be concluded by asking whether an action for decitwill lie ... There are other
obligations besides that of honesty tile breach of which may give a right to
damages. These obligations depend on principles which the judges have
worked out in the fashion that is characteristic of a system where much of
the law has always been judge-made and unwritten." It hardly needed
Donoghue v. Stevenson to show that that process can still operate. Then III
Lord Haldane quoted a passage from the speech of Lord Herschell in Derry v.
Peek1 12 where he excluded from the principle of that case "those cases
where a person within whose special province it lay to know a particular fact
has given an erroneous answer to an inquiry made with regard to it by a
person desirous of ascertaining the fact for the purpose of determining his
course." Then he explained the expression constructive fraud" and said:
"What is really means in this connection is, not moral fraud in the ordinary
sense, but breach of the sort of obligation which is enforced by a court which
from the beginning regarded itself as a court of conscience." He went on to
refer to "breach of special duty" and said:
"If such a duty can be inferred in a particular case of a person issuing a
prospectus., as, for instance, in the case of directors issuing to the
shareholders of the company which they direct a prospectus inviting the
Subscription by them of further :'capital, I do not find in Deny v. Peekl15 an
authority for the suggestion that an action for damages for
misrepresentation without an actual intention to deceive may not lie." I find
no dissent from these views by the other noble and learned Lords. Lord Shaw

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also quoted the passage I have quoted from the speech of Lord Herschell
and, dealing with equitable relief, he approved a passage in an argument of "
Sir Roundell Palmer in Peek v. Gurney which concluded. " ... in order that a
person may avail himself of relief founded on it he must show that there was
such a proximate relation between himself and the person making the
representation as to bring them virtually into the position of parties
contracting with each other," an interesting anticipation in 1871 of the test of
who is my neighbour Lord Haldane gave a further statement of his view in
Robinson v. National
Bank of Scotland Ltd. a case to which I shall return. Having said that in that
case there was no duty excepting the duty of cammon honesty he went on
to say: "In saying that I wish emphatically to repeat what I said in advising
this House in the case of Nocton v. Lord Ashburton, that it is a great mistake
to suppose that, because the principle in Deny v. Peek clearly covers all
cases of the class to which I have referred, therefore the freedom of action of
the courts in recognising special duties arising out of other kinds of
relationship which they find established by the evidence is in any way
affected. I think, as I said in Nocton's case, that an exaggerated view was
taken by a good many people of the scope of the decision in Derry v. Peek.
The whole of the doctrine as to fiduciary relationships, as to the duty of care
arising from implied as well ~s express contracts, as to the duty of care
arising from other special relationships which the courts may find to exist in
particular case, still remains, and I should be very sorry if any word fell from
me which should suggest that the courts are in any way hampered in
recognising that the duty of care may be established .when such cases really
occur." This passage makes it clear that Lord Haldane did not think that a
duty to take care must be limited to cases of fiduciary relationship in the
narrow sense of relationships which, had been recognised by the Court of
Chancery as being of a fiduciary character. He speaks of other special
relationships, and I can see no logical stopping place short of all those
relationships where it is plain that the party seeking information or advice

245
was trusting the other to exercise such a degree of care as the
circumstances required, where it was reasonable for him to do that, and
where the other gave the information or advice when he knew or ought to
have known that the inquirer was relying on him. I say "ought to have
known" because in questions of negligence we now apply the objective
standard of what the reasonable man would have done.

A reasonable man, knowing that he was being trusted or that his skill and
Judgment were being relied on, would, I think, have three courses open to
him. He could keep silent or decline to give the information or advice sought:
or he could give an answer with a clear qualification that he accepted no
responsibility for it or that it was given without that reflection or inquiry
which a careful answer would require: or he could simply answer without any
such qualification. If he chooses to adopt the last course he must, I think, be
held to have accepted some responsibility for his answer being given
carefully, or to have accepted a relationship with the inquirer which requires
him to exercise such care as the circumstances require.

If that is right, then it must follow that Candler u. Crane, Christmas & Co. was
wrongly decided. There the plaintiff wanted to see the accounts of a
company before deciding to invest in it. The defendants were the company's
accountants, and they were told by the company to complete the company's
accounts as soon as possible because they were to be shown to the plaintiff
who was a potential investor in the company. At the company's request the
defendants showed the completed accounts to the plaintiff discussed them
with him, and allowed him to take a copy. The accounts had been carelessly
prepared and gave a wholly misleading picture. It was obvious to the
defendants that the plaintiff was relying on their skill and judgment and on
their having exercised that care which by contract they owed to the
company, and I think that any reasonable man in the plaintiffs shoes would
have relied on that. This seems to me to be a typical case of agreeing to

246
assume a responsibility: they knew why the plaintiff wanted to see the
accounts and why their employers, the company, wanted them to be shown
to him, and agreed to show them to him Without even a suggestion that he
should not rely on them.

The majority of the Court of Appeal held that they were bound by Le Lieure v.
Gould and that Donoghue v. Stevenson had no application. In so holding I
think that they were right. The Court of Appeal have bound themselves to
follow all rationes decidendi of previous Court of Appeal decisions, and, in
face of that rule, it would have been very difficult to say that the ratio in Le
Lieure v. Gould did not cover Candler's case Denning L.J., who dissented
distinguished Le Lieure u. Gould on its facts, but, as I understand the rule
which the Court of Appeal`s have adopted, that is not sufficient if the ratio
applies; and this is not an appropriate occasion to consider whether the
Court of Appeal's rule is a good one. So the question which we now have to
consider is whether the ratio in Le Lieure u. Gould can be supported. But
before leaving Candler's case I must note that Cohen L.J. (as he then was)
attached considerable importance to a New York decision, Ultramares
Corporation v. Touche, a decision of Cardozo C.J. But I think that another
decision of that great judge, Glanzer v. Shepherd, is more in point because in
the latter case there was a direct relationship between the weigher who gave
a certificate and the purchaser of the goods weighed, who the weigher knew
was relying on his certificate: there the weigher was held to owe a duty to
the purchaser with whom he had no contract. The Ultramares case can be
regarded as nearer to Le Lieure v. Gould.

In Le Lievre v. Gould a surveyor, Gould, gave certificates to a builder who

employed him. The plaintiffs were mortgagees of the builder's interest and
Gould knew nothing about them or the terms of their mortgage; but the
builder, without Gould's authority, chose to show them Gould's report. I have
said that I do not intend to decide anything about the degree of proximity

247
necessary to establish a relationship giving rise to a duty of care, but it
would seem difficult to find such proximity in this case, and the actual
decision in Le Lieure v. Gould may therefore be correct. But the decision was
not put on that ground: if it had been Cann v. Willson would not have been
overruled.

Lord Esher M.R. held that there was no contract between the plaintiffs and
the defendant and that this House in Derry v. Peek had "restated the old law
that, in the absence of contract, an action for negligence cannot be
maintained when there is no fraud."Bowen L.J. gave a similar reason; he said:
Then Derry v. Peek decided this further point - viz., that in cases like the
present (of which Deny v. Peek was itself an instance) there is no duty
enforceable in law to be careful"; and he Added that the law of England
"does not consider that what a man writes on paper is like a gun or other
dangerous instrument, and, unless he intended to deceive, the law doesnot,
in the absence of contract, hold him responsible for drawing his certificate
carelessly." So both he and Lord Esher held that, Cann v. Willson was wrong
in deciding that there was a duty to take care. We now know on the authority
of Donoghue v. Stevenson that Bowen L.J. was wrong in limiting duty of care
to guns or other dangerous instruments, and I think that, for reasons which I
have already given, he was also wrong in limiting the duty of care with
regard to statements to cases where there is a contract. On both points
Bowen L.J. was expressing what was then generally believed to be the law,
but later, statements in this House have gone far to remove those
limitations. I would therefore hold that the ratio in Le Lievre v. Gould was
wrong and that Cann v. Willson ought not to have been overruled.

Now I must try to apply these principles to the presentcase. What the
appellants complain of is not negligence in the ordinary sense of
carelessness, but rather misjudgment, in that Mr. Heller, while honestly
seeking to give a fair assessment, in fact made a statement which gave a

248
false and misleading impression of his customer's credit. It appears that
bankers now commonly give references with regard to their customers as
part of their business. I did not know how far their customers generally
permit them to disclose their affairs, but, even with permission, it cannot
always be easy for a banker to reconcile his duty to his customer with his
desire to give a fairly balanced reply to an inquiry. And inquirers can hardly
expect a full and objective statement of opinion or accurate factual
information such as skilled men would be expected to give in reply to other
kinds of inquiry. So it seems to me to be unusually difficult to determine just
what duty beyond a duty to be honest a banker would be held to have
undertaken if he gave a reply without an adequate disclaimer of
responsibility or other warning. It is in light of such considerations that I
approach an examination of the case of Robinson v. National Bank of
Scotland Ltd

It is not easy to extract the facts from the report of the case in the Court of
Session. 145 Several of the witnesses were held to be unreliable and the
principal issue in the case, fraud, is not relevant for present purposes.

But the position appears to have been this. Harley and two brothers Inglis
wished to raise money. They approached an insurance company on the false
basis that Harley was to be the borrower and the Inglis brothers were to be
guarantors. To satisfy the company as to the financial standing of the Inglis
brothers Harley got his London bank to write to M'Arthur, a branch agent of
the National Bank of Scotland, and M'Arthur on July 28,1910, sent a reply
which was ultimately held to be culpably careless but not fraudulent.
Robinson, the pursuer in the action, said that he had been approached by
Harley to become a guarantor before the inquiry was made by Harley, but he
was disbelieved by the Lord Ordinary who held that he was not brought into
the matter before September. This was accepted by the majority in the Inner
House and there is no indication that any of their Lordships in this House

249
questioned the finding that the letter of July 28 was not obtained on behalf of
Robinson. Harley and the brothers Inglis did not proceed with their scheme in
July but they resumed negotiations in September. The company wanted an
additional guarantor and Harley approached Robinson. A further reference
was asked and obtained from M'Arthur on October 1 about the Brothers
Inglis. but no point was made of this. The whole case turned on M'Arthur's
letter of July 28. After further negotiation the company made a loan to Harley
with the brothers Inglis and Robinson as guarantors. Harley and the brothers
Inglis all became bankrupt and Robinson had to pay the company under his
guarantee.

Robinson sued the Natibnal Bank and M'Arthur. He alleged that M'Athur`s
letter was fraudulent and that he had been induced by it to guarantee the
loan. He also alleged that M'Arthur had a duty to disclose certain facts about
the brothers Inglis which were known to him, but this altenative case played
a very minor part in the litigation. Long opinions were given in the Court of
Session on the question of fraud but the alternative case of a duty to disclose
was dealt with summarily. The Lord Justice-Clerk said: "It appears to me that
there was no such duty of disclosure imposed upon Mr. M`Arthur towards the
pursuer as would justify us in applying the principle on which Nocton's case
was decided."Lord Dundas referred to cases of liability of a solicitor to his
client for erroneous advice and of similar liability arising from a 'fiduciary
relationship and said: "Such decisions seem to me to have no bearing on, or
"application to, the facts of the present case." He also drew attention to the
last sentence of the letter of July 28 which he said would become important if
fraud were out of the case. That sentence is: "The above information is to be
considered strictly confidential, and is given on the express understanding
that we incur no responsibility whatever in furnishing it." Lord Salvesen, who
dissented, did not deal with the point: and Lord Cuthrie merely said that here
there was no fiduciary relationship.

250
In this House an unusual course was taken during the argument: after
counsel for the respondents (Mr. Blackburn K.C.) had been heard for a short
time, Earl Loreburn informed him that their Lordships, as at present advised,
thought that there was no special duty on M'Arthur toward the pursuer; that
the respondents were not liable unless M'Arthur's representations were
dishonest; and that their Lordships had not been satisfied as yet that the
representations were dishonest... that under the circumstances the House
was prepared to dismiss the appeal; but that they considered the pursuer
had been badly treated, though he had not any cause of action at law, and
that, therefore, their Lordships were disposed to direct that there should be
no costs of the action on either side.
Earl Loreburn said that Mr. Blackburn might prefer to argue the case further
and endeavour to alter these views, but of course he would run the risk of
altering their Lordships views as to the legal responsibility as well as upon
the subject of costs," Mr. Blackbum then wisely no doubt - said no more,
and judgment was given for the bank but with no costs here or below.

That case is very nearly indistinguishable from the present case. Lord
Loreburn regarded the fact that M'Arthur knew that his letter might be used
to influence others besides the immediate inquirer as entitling Robinson to
found on it if fraud had been proved. But it is not clear to me that he
intended to decide that there would have been sufficient proximity between
Robinson and M`Arthur to enable him to maintain that there was a special
relationship involving a duty of care if the other facts had been sufficient to
create such a relationship. I would not regard this as a binding decision on
that question.

With regard to the bank's duty Lord Haldane said: 'There is only one other
point about which I wish to say anything, and that is the question which was
argued by the appellant, as to there being a special duty of care under the
circumstances. Here I think the case of Derry v. Peek in this House has finally

251
settled in Scotland, as well as in England and Ireland, the conclusion that in a
case like this no duty to be careful is established. There is the general duty of
common honesty, and that duty, of course, applies to the circumstances of
this caseas it applies to all other circumstances. But when a mere inquiry is
made by one banker of another, who stands in no special relation to him,
then, in the absence of special circumstances from which a contract to be
careful can be inferred, I think there is no duty excepting the duty of
common honesty" to which I have referred.

I think that by "a contract to be careful" Lord Haldane must have meant an
agreement or undertaking to be careful. This was a Scots case and by Scots
law there can be a contract without consideration: Lord Haldane cannot have
meant that similar cases in Scotland and England would be decided
differently on the matter of special relationship for that reason. I am, I think
entitled to note that this was an extempore judgment. So Lord Haldane was
contrasting a "mere inquiry" with a case where there are special
circumstance from which an undertaking to be careful can be inferred. In
Robinson's case any such undertaking was excluded by the sentence in
M'Arthur's letter which I have quoted and in which he said that the
information was given"on the express understanding that we incur no
responsibility "whatever in furnishing it.

It appears to me that the only possible distinction in the present case is that
here there was no adequate disclaimer of responsibility. But here the
appellants' bank, who were their agents in making the inquiry, began by
saying that "the wanted "to know in confidence and without responsibility on
our part," that is, on the part of the respondents. So I cannot see how the
appellants can now be entitled to disregard that and maintain that the
respondents did incur a responsibility to them.

252
The appellants founded on a number of cases in contract where very dear
words were required to exclude the duty of care which would otherwise have
flowed from the contract. To that argument there are, I think, two answers. In
the case of a contract it is necessary to exclude liability for negligence, but is
this case the question is whether an undertaking to assume a duty to take
care can be inferred: and that is a very different matter. And, secondly even
in cases of contract general words may be sufficient if there was no other
kind of liability to be excluded except liability for negligence: the general rule
is that a party is not exempted from liability for negligence "unless "
adequate words are used" - per Scrutton L.J. in Ruiter v. Palmer It being
admitted that there was here a duty to give an honest reply, I do not see
what further liability there could be to exclude except liability for,
negligence: there being no contract there was no question of warranty.

I am therefore of opinion that it is clear that the respondents never

undertook any duty to exercise care in giving their replies. The appellants
cannot succeed unless there was such a duty and therefore in my judgment
this appeal must be dismissed.

Lord Morris of Borth-y-gest. My Lords, the important question of law which

has concerned your Lordships in this appeal is whether, in the circumstances
of the case, there was a duty of care owed by the respondents, whom I will
call "the bank." to the appellants, whom I will call "Hedleys. In order to
recover the damages which they claim Hedleys must establish that the bank
owed them a duty, that the bank failed to discharge such duty, and that as a
consequence Hedley& suffered loss.

An allegation of fraud was originally made but was abandoned, The learned
judge held that the bank had been negligent put that they owed no duty to
Hedleys to exercise care. The Court of Appeal agreed with the learned judge
that no such duty was owed and it was therefore not necessary for them to

253
consider, whether the finding of negligence ought or ought not to be upheld.
In your Lordships House the legal issues were debated and again it did not
become necessary to consider whether the finding of negligence ought or
ought not to be upheld. It is but fair to the bank to state that they firmly
contend that they were not in any way negligent and that they were
prepared to make submissions byway of challenge of the conclusions of the
learned judge.

[His Lordship"stated the facts and continued:] It is, I think, a reasonable and
proper inference that the bank must have known that the National Provincial
were making their inquiry because some customer of their was or might be
entering into some advertising contract in respect of which Easipower Ltd.
might become under a liability to such customer to the extent of the figures
mentioned. The inquiries were from one bank to another. The name of the
customer (Hedleys) was not mentioned by the inquiring bank (National
Provincial) to the answering bank (the bank): nor did the inquiring bank
(National Provincial) give to the customer (Hedleys) ,the name of the
answering bank (the bank). These circumstances do not seem to me to be
material. The bank must have known, that the inquiry was being made by
someone who was contemplating doing business with Easipower Ltd. and
that their answer or the substance of it would in fact be passed on to such
person. The conditions subject to which the bank gave their answers are
important but the fact that the person to whom the answers would in all
probability be passed on was unnamed and unknown to the bank is not
important for the purposes of a consideration of the legal issue which now
arises. It is inherently unlikely that the bank would have entertained a direct
application from Hedleys asking for a report or would have answered an
inquiry made by Hedleys themselves: even if they had, they would
certainly have stipulated that their answer was without responsibility.

254
The present appeal does not raise any question as to the circumstances
under which a banker is entitled (apart from direct authorization) to answer
an inquiry. I leave that question as it was left by Atkin L.J. in Tornier v.
National Provincial & Union Bank of England when he said:

"I do not desire to express any final opinion on the practice of bankers to
give one another information as to the affairs of their respective customers,
except to say it appears to me that if it is Justified it must be upon the basis
of an implied consent of the customer.

The legal issue which arises is, therefore, whether the bank would have been
under a liability to Hedleys if they had failed to exercise care. This involves
the questions whether the circumstances were such that the bank owed a
duty of care to Hedleys, or would have owed such a duty but for the words
"without "responsibility," or whether they owed such a duty but were given a
defence by the words "without responsibility" which would protect them if
they had failed to exercise due care.

My Lords, it seems to me that if A assumes a responsibility to B to tender him

deliberate advice, there could be a liability if the advice is negligently given. I
say "could be" because the ordinary courtesies and exchanges of life would
become impossible if it were sought to attach legal obligation to every kindly
and friendly act. But the principle of the matter would not appear to be in
doubt. If A employs B (who might, for example, be a professional man such
as an accountant or a solicitor or a doctor) for reward to give advice and if
the advice is negligently given there could be a liability in B to pay damages.
The fact that the advice is given in words would not, in my view, prevent
liability from arising. Quite apart, however, from employment or contract
there may be circumstances in which a duty to exercise care will arise if a
service is voluntarily undertaken. A medical man may unexpectedly come
across an unconscious man, who is a complete stranger to him, and who is in

255
urgent need of skilled attention: if the medical man, following the fine
traditions of his profession, proceeds to treat the unconscious man he must
exercise reasonable skill and care in doing so. In his speech in Banbury v.
Bank of Montreal Lord Atkinson said: "It is well established that if a doctor
proceeded to treat a patient gratuitously, even in a case where the patient
was insensible at the time and incapable of employing him, the doctor would
be bound to exercise all the professional skill and knowledge he possessed,
or professed to possess, and would be guilty of gross negligence if he
omitted to do so. ,; To a similar effect were the words of Lord Loughborough
in the much earlier case of Shiells v, Blackburne when he said: if a man
gratuitously undertakes to do a thing to the best of his skill, where his
situation or profession is such ,as to imply skill, an ommision of that skill is
imputable to him as gross negligence." Compare also Wilkinson v. Coverdale.
I can see no difference of principle in the case of a banker. If someone who
was not a customer of bank made a formal approach to the bank with a
definite request that the bank would give him deliberate advice as to certain
financial matters of a nature with which the bank ordinarily dealt the bank
would be under no obligation to accede to the request: If, however, they
undertook, though gratuitously, to give deliberate advice (I exclude what I
might call casual and perfunctory Conversations) they would be under a duty
to exercise reasonable care in giving it. They would be liable if they were
negligent although, there being no consideration, no enforceable contractual
relationship was created.

In the absence of any direct dealings between one person and another, there
are many and varied situations in which, duty is owed by one person to
another. A road user owes a duty of care towards other road users. They are
his "neighbours." A duty was owed by the dock owner In Heaven v. Pender.
Under a contract with a shipowner he had put up a staging outside a ship in
his dock. The plaintiff used the staging because he was employed by a ship
painter who had contracted with the shipowner to paint the outside of the

256
ship. The presence of the plaintiff was for business in which the dock owner
was interested and the plaintiff was to be considered as having been invited
by the dock owner to use the staging. The dock owner was therefore under
an obligation to take reasonable care that at the time when the staging was
provided by him for immediate use it was in a fit state to be used. For an
injury which the plaintiff suffered because the staging had been carelessly
put up he was entitled to succeed in a claim against the defendant. The
chemist in George c. Skivington .

Sold the bottle of hair wash to the husband knowing that it was to be used by
the wife. It was held on demurrer that the chemist owed a duty towards the
wife to use ordinary care in compounding the hair wash. In Donoghue v.
Stevenson it was held that the manufacturer of all article of food, medicine,
or the like, is under a duty to the ultimate consumer to take reasonable care
that the article is free from defect likely to cause injury to health.

My Lords, these are but familiar and well known illustrations, which could be
multiplied, which show that irrespective of any contractual or fiduciary
relationship and irrespective of any direct dealing, a duty may be owed by
one person to another. It is said, however, that where careless (but not.
fraudulent.) misstatements are in question there can be no liability in the
maker of them unless there. is either some contractual of fiduciary
relationship with a person adversely affected by the making ,of them or
unless, through the making of them, something is created or circulated or
some situation is created which is dangerous to life limb or property. In logic I
can see no essential reason for distinguishing injury which is caused by a
reliance upon words from injury which is caused by a reliance upon the
safety of the staging to a ship or by a reliance upon the safety for use of the
contents of a bottle of hair wash or a bottle of some consumable liquid. It
seems to me, therefore, that if a c1aims that he has suffered injury or loss as
a result of acting upon some misstatement made by B who is not in any

257
contractual or fiduciary relationship with him, the inquiry that is first raised is
whether B owed any duty to A: if he did the further inquiry is raised as to the
nature of the duty. There may be circumstances under which the only duty
owed by B to A is the duty of being honest: there may be circumstances
under which B owes to A the duty not only of being honest but also a duty of
taking reasonable care. The issue in the present case is whether the bank
owed any duty to Hedleys and if so what the duty was.

Leaving aside cases where there is some contractual or fiduciary

relationship, there may be many situations in which one person voluntarily or
gratuitously undertakes to do something for another person becomes under
a duty to exercise reasonable care. I have given illustrations. But apart from
cases where there is some direct dealing there may be cases where one
person issues a document which should be

the result or an exercise of the skill and judgment required by him in his
calling and where he knows and intends that its accuracy will be relied upon
by another. In this connection it will be helpful to consider the case of Cann
v. Willson. The owner of some property wished to obtain an advance of
money on mortgage of the property and applied to a firm of solicitors for the
purpose of their finding a mortgage. Being informed by the solicitors that, for
the purpose of finding a mortgage, he should have a valuation made of the
property, he consulted the defendants and asked them to make a valuation.
They surveyed and inspected the property and then made a valuation which
they sent to the solicitors. The solicitors then particularly called the
defendants' attention to the purpose for which the valuation was wanted and
to the responsibility they were undertaking. The defendants stated that their
valuation was a moderate one and certainly was not made in favour of the
borrower. The valuation and representations so made by the defendants to
the solicitors were communicated to the plaintiff (and a co-trustee of his) by
the solicitors. The plaintiff (and his co-trustee, who died before the

258
commencement of the action) then advanced money to the owner upon the
security of a mortgage of his property. Chitty J. held in the evidence (1) that
the defendants were aware of the purpose for which the valuation was made,
and (2) that the "valuation was sent by the "defendants direct to the agents
of the plaintiff for the purpose of including the plaintiff and his co-trustee to
lay out the trust money on mortgage." The owner made default in payment
and the property proved insufficient to answer the mortgage. The plaintiff
alleged that the value of the property was not anything like the value given
by the defendants in their valuation. Chitty J. held that "the valuation as
made was, in fact, no valuation at all." In those circumstances, the claim
made was on the basis that the plaintiff had sustained loss through the
negligence, want of skill, breach of duty and misrepresentation of the
defendants. Chitty J. held the defendants liable. His decision was principally
based upon his finding that the defendants owed a duty of care to the
plaintiff. It had been argued that there was also liability in the defendants in
contract (referred to in the judgment as the first ground) and on the ground
of fraud (referred to as the third ground). At the end of his judgment Chitty J.
said: "I have entirely passed by the question of "contract. It is unnecessary to
decide that point. I consider on these two last grounds - and if I were to
prefer one to the other it would be the second ground - that the defendant is
liable for the negligence." In the course of his judgment he said: 'It is not
necessary, in my opinion,to decide the case with reference to the third point,
but even on the third point I think the defendants are liable - and that is what
may be termed fraudulent misrepresentation." He then (that is, on June. 7
1888) referred to the judgment in the Court of Appeal in Peek v. Derry. That
Judgment was reversed in the House of Lords on July J, 1889. Chitty J.
compared the situation with that which arose in Heaven v. Pender. He
pointed out that in that case there was "no contractual relation between the
plaintiff and the dock-owner, add there was no personal direct invitation to
the plaintiff to come and do the work on that ship, yet it was held that the
dock-owner had undertaken an obligation towards the plaintiff, who was one

259
of the persons likely to come and do the work to the vessel, and that he was
liable to him and was under an obligation to him to use due diligence in the
construction of the staging Chitty J. went on, therefore, to hold that, as the
defendants had "knowingly placed themselves" in the position of sending
their valuation "direct to the agents of the plaintiff for the purpose of
inducing the p1aintiff." then they "in point of law incurred a duty towards him
to use reasonable care in the preparation of the document " He likened the
case to George v. Skivington and continued : "In this case the document
supplied appears to me to stand upon a similar footing and not to be
distinguished from that case, as if it had been an actual article that had been
handed over for the particular purpose of being so used. I think, therefore,
that the defendants stood with regard to the plaintiff - quite apart from any
question of there being a contract or not in the peculiar circumstances of this
case - in the position of being under an obligation, or duty to towards him."
My Lords, I can see no fault or flaw in this reasoning and I an1 prepared to
uphold it. If it is correct, then it is submitted that in the present case the
bank knew that some existing (though to them by name unknown) person
was going to place reliance upon what they said and that accordingly they
owed a duty of care to such person. I will examine this submission. Before
doing so l must however, further consider Cann v. Willson. It was overruled
by the court of Appeal in Le Lieure v. Gould: The latter case, binding on the
Court of Appeal, in turn led to the decision in Candle v. Crane, Christmas &
Co. It 1s necessary, therefore, to consider the reasons which governed the
Court of Appeal in Le Lieure D. Gould in overruling Cann v. Willson. I do not
propose to examine the facts in Le Le Leure v. Gould; nor need I consider
whether the result would have been no different had Cann v. Willson not
been overruled. Lord Esher M.R. said: "But I do not hesitate to say that Cann
v. Willson is not now law. Chitty J., in deciding that case, acted upon an
arreneuos proposition of law, which has been since overruled by the House of
Lords in Deny v. Peek when they restated the old law that, in the absence of
contract, an action for negligence cannot be maintained when there is no

260
fraud." Bowen L.J. said that he considered that Derry v. Peek had overruled
Cann v, Willson: He considered that Heaven v. Pender gave no support for
that decision because it was no more than an instance of the class of cases
where one who, having the conduct and control of premises which may injure
those whom he knows will have a right to and will use them, owes a duty to
protect them. He said; "Then Derry v. Peek186 decided this further point, -
viz., that in cases like the present (of which Derry v. Peek was itself an
instance) there is no duty enforceable in law to be careful." He followed the
view expressed by Romer J. in Scholes v. Brook that the decision of the House
of Lords in Derry v. Peek by implication negatived the existence of any such
general rule as laid down in Cann v.Willson. The reasoning of A. L. in
overruling Cann v. Willson was on similar lines.

The inquiry is thus raised as to whether it was correct to say that Derry v.
Peek had either directly or at least by implication overruled that part of the
reasoning in Cann v. Willson which led Chitty, J. to say that, quite apart from
contract and quite apart from fraud, there was a duty of care owed by the
defendants to the plaintiffs. My Lords, whatever views may have been held
at one time as to the effect of Derry v. Peek, authoritative guidance as to this
matter was given in your Lordships House in 1914 in the case of Nocton v,
Lord Ashburton. In his speech in that case Viscount Haldane L.C. said "May
Lords, the discussion of the case by the noble and learned Lords who took
part in the decision appears to me to exclude the hypothesis that they
considered any other question to be before them than what was the
necessary foundation of an ordinary action for deceit. They must indeed be
taken to have thought that the facts proved as to the relationship of the
parties in Derry v. Peek were not enough to establish any special duty arising
out of that relationship other than the general duty of honesty. But they do
not say that where a different sort of relationship ought to be inferred from
the

261
circumstances the case is to be concluded by asking whether an action for
deceit will lie. I think that the authorities subsequent to the decision of the
House of Lord show a tendency to assume that it was intended to mean more
than it did. In reality the judgment covered only a part of the field in which
liabilities may arise. There are other obligations besides that of honesty the
breach of which may give a right to damages. These obligations depend on
principles which the judges have worked out in the fashion that is
characteristic of a system where much of the law has always been judge-
made and unwritten." After a review of many authorities Lord Haldane said:
'But side by side with the enforcement of the duty of universal obligation to
be honest and the principle which gave the right torescission, the courts, and
especially the Court of Chancery, had to deal with the other cases to which I
have referred, cases raising claims of an essentially different character which
have often been mistaken for actions of deceit. Such claims raise the
question whether the circumstances and relations of the parties are such as
to give rise to duties of particular obligation which have not been fulfilled."
Lord Haldane pointed out that from the circumstances and relations of the
parties a special duty may arise: there may be an implied contract at law or
a fiduciary obligation in equity. What Derry v. Pee decided was that the
directors were under no fiduciary duty to the public to whom they had
addressed the invitation to subscribe. (I need not here refer to statutory
enactments since Derry v. Peek.

In his speech in the same case Lord Dunedin pointed out that there many
ways. There may be duties owing to the world at large: alterum non laedere.
There may be duties arising from contract. There may be duties which arise
from a relationship without the intervention of contract in the ordinary sense
of the term, such as the duties of a trustee to his cestui que trust or of a
guardian to his ward.

262
Lord Shaw in his speech pointed out that Derry v. Peek "was an action
whooly and solely of deceit, founded wholly and solely on fraud; was treated
by this House on that foting alone, and that - this being so -what was decided
was that fraud must ex necessitate contain the element of moral
delinquency. Certain expressions by learned Lords may seem to have made
incursions into the region of negligence, but Derry v. Peek as a decision was
directed to the single and specific point just set out." Lord Shaw formulated
the following principle: That once the relations of parties have been
ascertained to be those in which a duty is laid upon one person of giving
information or advice to another upon which that other is entitled to rely as
the basis of a transaction, responsibility for error amounting to
misrepresentation in any statement made will attach to the adviser or
informer, although the information and advice have been given not
fraudulently but in good faith."

Lord Parmoor in his speech said in reference to Derry v. Peek; "That case
decides that in an action founded on deceit, and in which deceit is a
necessary factor, actual dishonesty, involving means rea, must be proved.
The case, in my opinion, has not bearing whatever on a breach of duty in
which dishonesty is not a necessary factor."

My Lords, guided by the assistance given in Nocton v. Lord Ashburton. I

consider that it ought not to have been held in Le Lievre v. Gould that Cann
v. Willson was wrongly decided. Independently of contract, there may be
circumstances where information is given or where advice is given which
establishes a relationship which createsa duty not only to be honest but also
to be careful.

In his speech in Heilbut, Symons & Co. v. Buckleton Lord Moulton said that it
was of the greatest importance to "maintain in its full integrity the principle
that a person is not liable in damages for an innocent misrepresentation, no

263
matter in what way or under what form the attack is made." That principle is,
however, in no way impeached by recognition
of the fact that if a duty exists there is a remedy for the breach of it. As
Bowen L.J. said in Low v. Bouverie: ... the doctrine that negligent
misrepresentation affords no cause of action is confined to cases in which
there is no duty, such as the law recognises, to be careful."

The inquiry in the present case, and in similar cases, becomes, therefore, an
inquiry as to whether there was a relationship between the parties which
created a duty and, if so, whether such duty included a duty of care.

The guidance which Lord Haldane gave in Nocton v. Lord Ashburton was
repeated by him in his speech in Robinson v. National Bank of Scotland Ltd .
He clearly pointed out that Derry v. Peek did not affect (1) the whole
doctrine as to fiduciary relationship, (2) the duty of care arising from implied
as well as express contracts, and (3) the duty of care arising from other
special relationships which the courts may find to exist in particular cases.

My Lords, I consider that it follows and that it should now be regarded as

settled that if someone possessed of a special skill undertakes, quite
irrespective of contract, to apply that skill for the assistance of another
person who relies upon such skill a duty of care will arise. The fact that the
service is to be given by means of or by the instrumentality of words can
make no difference. Furthermore, if in a sphere in which a person is so placed
that others could reasonably rely upon his judgment or his skill or upon his
ability to make careful inquiry, a person takes it upon himself to give
information or advice to, or allows his information or advice to be passed on
to, another person who, as he knows or should know, will place reliance upon
it, then a duty of care will arise.

264
I do not propose to examine the facts of particular situations or the facts of
recently decided cases in the light of his analysis but I proceed to apply it to
the facts of the case now under review. As I have stated, I approach the case
on the footing t.hat the bank knew that what they said would ill fact be
passed on to some unnamed person who was a customer of the National
Provincial Bank. The fact that it was said that "they," that is, the National
Provincial Bank, "wanted to know" does not prevent this conclusion. In these
circumstances, I think some duty towards the unnamed person, whoever it
was, was owed by the bank. There was a duty of honesty. The great question,
however, is whether there was a duty of care. The bank need not have
answered the inquiry from the National Provincial Bank. It appears, however,
that it is a matter of banking convenience or courtesy and presumably of
mutual business advantage that inquiry as between banks will be answered.
The fact that it is most unlikely that the bank would have answered a direct
inquiry from Hedleys does not affect the question as to what the bank must
have known as to the use that would be made of any answer that gave but
It cannot be left out of account in considering what it was that the bank
undertook to do. It does not seem to me that they undertook before
answering an inquiry to expend time or trouble "in searching records,
studying documents "weighing and comparing the favourable and
unfavourable features and producing a well-balanced and well-worded
report." (I quote the words of Pearson L.J Nor does it seem to me that the
inquiring bank (nor therefore their customer) would expect such a process:
This was, I think, what was denoted by Lord Haldane in his speech in
Robinson .v. National Bank of Scotland Ltd when he spoke of a "mere inquiry"
being made by one banker of another. In Parsons v. Barclay & Co. Ltd
Cozens-Hardy M.R expressed the view that it was no part of a banker's duty,
when asked for a reference. to make inquiries outside as to the solvency or
otherwise of the person asked about or to go more than answer the question
put to him honestly from what he knew from the books and accounts before
him. There was in the present case no contemplation of receiving anything

265
like a formal and detailed report such as might be given by some concern
charged with the duty (probably for reward) of making all proper and
relevant inquiries concerning the nature, scope and extent of a company's
activities and of obtaining and marshalling all available evidence as to its
credit, efficiency, standing and business reputation. There is much to be said,
therefore, for the view that if a banker gives a reference in the form of a brief
expression of opinion in regard to credit-worthiness he does not accept, and
there is not expected from him, any higher duty than that of giving an honest
answer. I need not, however, seek to deal further with this aspect of the
matter, which perhaps cannot be covered by any statement of general
application, because, in my judgment, the banking in the present case, by
the words which they employed, effectively disclaimed any assumption of a
duty of care. They stated that they only responded to the inquiry on the
basis that their reply was without responsibility. If the inquires chose to
receive and act upon the reply they cannot disregard the definite terms upon
which it was given. They cannot accept a reply given with a stipulation and
then reject the stipulation. Furthermore, within accepted principles (as
illustrated in Rutter v. Palmer) the words employed were apt to exclude any
liability for negligence.

Lord Hodson. My Lords, the appellants, who are advertising agents, claim
damages for loss which they allege they have suffered through the
negligence of the respondents, who are merchant bankers. The negligence
attributed to the respondents consists of their failure to act with reasonable
skill and care in giving references as to the credit-worthiness of a company
called Easipower Ltd. which went into liquidation after the references had
been given so that the appellants were unable to recover the bulk of the
costs of advertising orders which Easipower Ltd had placed with them. The
learned judge at the trial found that the respondent bankers had been
negligent in the advice which they gave in that; form of bankers' references,
the appellants being a company which

266
Acted in reliance on the references and suffered financial loss accordingly but
that he must enter judgment for the respondents since there was no duty
imposed by law to exercise care in giving these references, the duty being
only to act honestly in so doing.

The respondents have at all times maintained that they were in no sense
negligent and further that no damage flowed from the giving of references,
but first they took the point that, whether or no they were careless and
whether or no the appellants suffered damage as a result of their
carelessness, they must succeed on the footing that no duty was owed by
them. This point has been taken throughout as being, if the respondents are
right, decisive of the whole matter. I will it first, although the underlying
question is whether the respondent bankers who at all times disciplined
responsibility ever assumed any duty at all.

The appellants depend on the existence of a duty said to be assumed by or

imposed on the respondents when they gave a reference as to the credit-
worthiness of Easipower Ltd. knowing that it would or might be relied upon
by the appellants or some other third party in like situation.

The case has been argued first on the footing that the duty was imposed by
the relationship between the parties recognized by law as being a special
relationship derived either from the notion of proximity introduced by Lord
Esher in Heaven v. Pender or from those cases firmly established in our law
which show that those who hold themselves out as possessing a special skill
are under a duty to exercise it with reasonable care.

The important case of Donoghue v. Stevenson shows that the area of

negligence is extensive, for, as Lord Macmillan said: "The grounds of action
may be as various and manifold as humar errancy; and the conception of
legal responsibility may develop in adaptation to altering social condition and

267
standards. The criterion of judgment must adjust and adapt itself to the
changing circumstance of life. The categories of negligence are never
closed.... Where there is room for diversity of view, it is in determining what
circumstances will establish such a relationship between the parties as to
give rise, on the one side, to a duty to take care, and on the other side to a
right to have care taken."

In that case the necessary relationship was held to have been established
where the manufacturer of an article, ginger beer in a bottle, sold it to a
distributor in circumstances which prevented the distributor or the ultimate
purchaser or consumer from discovering by inspection any defect. He is
under a legal duty to the ultimate purchaser or consumer to take reasonable
care that the article is free from injurious defect. No doubt that was the
actual decision in that case, and indeed it was thought by Wrottesley J. in
Old Gate Estates Ltd. v. Toplis & Harding & Russell that he he was precluded
from awarding damages in tort for a negligent valuation made by a firm of
valuers which knew it was to be used by the plaintiffs since the doctrine of
Donoghue v. Stevensonwas confined to negligence which results in danger to
life, limb or health. I do not think that this is the true view of Donoghue v.
Stevenson, but the decision itself although its effects has been extended to
cases where there was no expectation as contrasted with opportunity of
inspection (see "Grant v. Australian Knitting Mills Ltd and to liability of
repairers (see Haseldene v. C.A. Daw & Sons Ltd.), has never been applied to
cases where damages are claimed in tort for negligent statements producing
damage.

216 11 Q~B.D. 503, 509. A.C. 1964.

217 [1932) A.C. 562, 619.

268
218 ( 1939) 161 L. T. 227; [ 1939 ] 3 All E. R . 209 .
219 [1932) A.C. 562.
220 [1936) A.C. 85; 52 T.L.R. 38, P.C.
221 [1941) 2 K.B. 343; 58 T.L.R. 1; [1941] 3'All E.R. 156, C.A.

The attempt so to apply it failed as recently as 1951. when in Candler v.

Crane, Christmas & Co.222 the Court of Appeal by a majority held that a
false statement made carelessly, as contrasted with fraudulently, by one
person to another, though acted on by that other to his detriment, was not
actionable in the absence of any contractual or fiduciary relationship
between the parties and that this principle had in no way been modified by
the decision in Donoghue v, Stevenson. Cohen L.J., one of the majority of the
court, referred to the language of Lord Esher M.R in Le Lievre v. Gould,who,
repeating the substance of what he had said in Heaven v. Pender, said: "If
one man is near to another, or is near to the property of another, a duty lies
upon him not to do that which may cause a personal injury to that other, or
may injure his property." Asquith L.J., the other member of the majority of the
court, held that the "neighbour" doctrine had not been applied where the
damage complained of was not physical in its incidence to either person or
property. The majority thus went no further than Wrottesley J., in the Old
Gate Estate case save that injury to properly was said to be contemplated by
the doctrine expounded in Donoghue v. Stevenson.It is desirable to consider
the reasons given by the majority for their decision in the Candler case, for
the appellants rely upon the dissenting judgment of Denning L.J. in the same
case. The majority,as also the learned trial judge, held that they were bound
by tile decision of the Court of Appeal in Le Lieure v. Gould, in which the
leading judgment was given by Lord Esher M.R. and referred to as
authoritative by Lord Atkin in Donoghue v. Stevenson.

269
It is true that Lord Esher refused to extend the proximity doctrine so as to
cover the relationship between the parties in that case and the majority in
Candler's case were unable to draw a valid distinction between the facts of
that case and the case of Lieure v. Gould Denning L.J., however, accepted the
argument for the appellant which has been repeated before your Lordships,
that the facts in Le Lieure v. Gould were not such as to impose a liability, for
the plaintiff mortgagees who alleged that the owner's surveyor owed a duty
to them not only had the opportunity but had stipulated for inspection by
their own surveyor. The defendant's employee who prepared the accounts in
Candler's case knew that the plaintiff was a potential investor in the
company of which the accounts were negligently prepared and that the
accounts were required in order that they might be shown to the plaintiff. In
these circumstances I agree with Denning L.J. that there is a valid distinction
between the two cases. In Le Lieure v. Gould it was held that an older case of
Cann v. Willson was overrulled. That is a case where the facts were in pari
materia with those in Candler's casea Chitty J'. held the defendants liable
because (1) they independently of contract owed a duty to the plaintiff which
they failed to discharge, (2) that they had made reckless statements on
which the plaintiff had acted. This case was decided before this House in
Derry v. Peekoverruled the Court of Appeal on the second proposition but the
first proposition' was untouched by Derry v. Peek and. in so far as it
depended on the authority of George v. Skivingtonthe latter case was
expressly affirmed in Donoghue v. Stevensonalthough it had often previously
been impugned. It is true that, as Asquith L.J. pointed out in referring to
George v. Skivingtonthe hair wash, put into circulation with the knowledge
that it was intended to be used by the purchaser's wife, was a negligently
compounded hair wash so that the case was so far on all fours with
Donoghue v. Stevenson. but the declaration also averred that the defendant
had said that the hair wash was safe. I cannot see,that there is any valid
distinction in this field between a negligent statement, for example, an
incorrect la.bel on a bottle which leads to injury and a negligent

270
compounding of ingredients which leads to the same result. It may well be
that at the time when Le Iievre v. Gould. was decided the decision of this
House in Derry v. Peek. was thought to go further than it did. It certainly
decided that careless statements recklessly but honestly made by directors
in a prospectus issued to the public were not actionable on the basis of
fraud, and inferentially that such statements would not be actionable in
negligence (which had not in fact been pleaded), but it was pointed out by
this House in Nocton v. Lord Ashburton. that an action does lie for negligent
misstatement where the circumstances disclose a duty to be careful. It is
necessary in this connection to quote the actual language of Lord Haddane.
Such a special duty may arise from the circumstances and relations of the
parties. These may give rise to an implied contract at law or to a fiduciary
obligation in equity. If such a duty can be inferred in a particular case of a
person issuing a prospectus, as, for instance, in the case of directors issuing
to the shareholders of the company which they direct a prospectus inviting
the subscription by them of further capital, I do not find in Derry v. Peek. an
authority for the suggestion that an action for damages for
misrepresentation without an actual intention to deceive may not lie. What
was decided there was that from the facts proved in that case no such
special duty to be careful in statement could be inferred, and that mere want
of care therefore gave rise to no cause of action. In other words, it was
decided that the directors stood in no fiduciary relation and therefore were
under no fiduciary duty to the public to whom they had addressed the
invitation to subscribe. I have only to add that the special relationship must,
whenever it is alleged, be clearly shown to exist."

So far I have done no more than summarise the argument addressed to the
Court of Appeal in Candler's case. to which effect was given in the dissenting
judgment of Denning L.J ... with which I respectfully agree in so far as it dealt
with the facts of that case. I am therefore of opinion that his judgment is to
be preferred to that of the majority, although the opinion of the majority is

271
undoubtedly supported by the ratio decidendi of Le Lievre v. Gould. which
they cannot be criticised for following.

This, however, does not carry the appellants further than this, that, provided
they can establish a special duty, they are entitled to succeed in an action
based on breach of that duty.

I shall later refer to certain cases which support the view that, apart from
what are usually called fiduciary relationships such as those between trustee
and cestui que trust, solicitor and client, parent and child, or guardian and
ward, there are other circumstances in which the law imposes a duty to be
careful, which is not limited to a duty to be careful to avoid personal injury or
injury to property but covers a duty to avoid inflicting pecuniary loss
provided always that there is a sufficiently close relationships to give rise to
a duty of care.

The courts of equity recognised that a fiduciary relationship exists "in almost
every shape, to quote from Field J. in Plowright v. Lambert. He went on to
refer to a case (Tate v, Williamson.) which had said that the relationship
could be created "voluntarily, as it were, by a person coming into a state of
confidential relationship with another by offering to give advice in a matter,
and so being disabled thereafter from purchasing. "

It is difficult to see why liability as such should depend on the nature of the
damage. Lord Roche in Morrison Steamship Co. Ltd. v. Greystoke Castle
(Cargo Owne'rs) instanced damage to a lorry by the negligence of the driver
of another lorry which, while it does no damage to the goods in the second
lorry, causes the goods owner to be put to expense which is recoverable by
direct action .against the negligent driver.

272
It is not to be supposed that the majority of the Court of Appeal who decided
as they did in Candler's case were unmindful of the, decision in Nocton v.
Lord Ashburton, to which their attention was drawn, but they seem to have
been impressed with the view that in the passage I have quoted Lord
Haldane had in mind only fiduciary relationships in the strict sense, but, in
my opinion. the words need not be so limited, I am fortified in this opinion by
examples to be found in the old authorities such as Shiells v. Blackburne,
Wilkinson v. Coverdale and Gladwell v. Stegall, which are illustrations of
cases where the law has held that a duty to exercise reasonable care (breach
of which is remediable in damages) has been imposed in the absence of a
fiduciary relationship where persons hold themselves out as possessing
special skill and are thus under a duty to exercise it with reasonable care.The
statement of Lord Loughborough in Shiells v. Blackburne is always accepted
as authoritative and ought not to be dismissed as dictum, although the
plaintiff failed to establish facts which satisfied the standard he set. He said:
" ... if a man gratuitously undertakes to do a thing to the best of his skill,
where his situation profession is such as to imply skill, an omission of that
skill is imputable to him as gross negligence.' True that proximity is more
difficult to establish where words are concerned than in the case of other
activities and mere casual observations are not to be relied upon (see fish v.
Kelly), but these matters go to difficulty of proof rather than principle.

A modern instance is to be found in the case of Woods v. Martins .Bank Ltd.,

where Salmon .J. held that on the facts of the case the defendant bank which
had held itself out as being advisers on investments (which . . as within the
scope of their business) and had not given the plaintiff reasonably careful or
skilful advice so that he suffered loss were held in breach of duty and so
liable in damages even though the plaintiff may not have been a customer of
the bank at the material time.

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True that the learned judge based this part of his conclusion on a fiduciary
relationship which he held to exist between the plaintiff and the bank and
thus brought himself within the scope of the decision in

Chandler` s case by which he was bound For my part, I should have

thought that even if the learned judge put a strained interpretation on the
word "fiduciary" which is based on the idea of trust, the decision can be
properly sustained as an example involving a special relationship.

I do not overlook the point forcefully made by Harmas L.J. in his judgment
and elaborated by counsel for the respondents before your Lordships, that it
may in certain cases appear to be strange that, whereas innocent
misrepresentation does not sound in damages. yet in the special cases under
consideration an injured party may sue in tort a third party whose negligent
misrepresentation has induced him to enter into the contract. As was pointed
out by Lord Wrenbury, however, in Banbury v. Bank of Montreal, innocent
misrepresentation is not the cause of action but evidence of the negligence
which is the cause of action.

Was there, then, a special relationship here? I cannot exclude from

consideration the actual terms in which the reference was given and I cannot
see how the appellants can get over the difficulty which these words put in
their way. They cannot say that the respondents are seeking, as it were to
contract out of their duty by the use of language
which is insufficient for the purpose, if the truth of the matter is that the
respondents never assumed ,a duty of care nor was such a duty imposed
upon them.

The first question is whether a duty was ever imposed, and the language
used must be considered before me question can be answered. In the case of
a person giving a reference I see no objection in law or morals to the giver of

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the reference protecting himself by giving it without taking responsibility for
anything more than the honesty of his opinion - which must involve without
taking responsibility for negligence in giving that opinion. I cannot accept the
contention of the appellants that the responsibility disclaimed was limited to
the bank to which the reference was given, nor can I agree that it referred
only to responsibility for accuracy of detail.

Similar words were present in the case of Robinson v. National Bank of

Scotland Ltd., a case in which the facts cannot, I think, be distinguished in
any material respect from this. Moreover, in the Inner House the words of
disclaimer were, I think, treated as not 'Without significance.

In this House the opinion was clearly expressed that the representations
made were careless, inaccurate and misleading but that the pursuer had no
remedy since there was no special duty on the bank's representative towards
the pursuer. This conclusion was reached quite apart from the disclaimer of
responsibility contained in the defender bank's letters.

Viscount Haldane recalled the case of Nocton v Lord Ashburton. in the

following passage: "In saying that I wish emphatically to repeat what I said in
advising this House in the case of Nadon v. Lord Ashburton.. that it is a great
mistake to suppose that, because the principle in Deny v. Peek. clearly
covers all cases of the class to which I have referred, therefore the freedom
of action of the courts in recognising special duties arising out of other kinds
of relationship which they find established by the evidence is in any way
affected . I think, as I said in Nocton's case, that an exaggerated view was
taken by a good many people of the scope of the decision in Derry v. Peek.
The whole of the doctrine as to fiduciary relationships, as to the duty of care
arising from implied as well as express contracts, as to the duty of care
arising from other special relationships which the courts may find to exist in
particular cases, still remains, and I should be very sorry if any word fell from

275
me which should suggest that the courts are in any way hampered in
recognising that the duty of care may be established when such cases really
occur."

This authority is. I think, conclusive against the appellants and is not
effectively weakened by the fact that the case came to an end before that
matter had been fully argued upon the House intimating that it was prepared
to dismiss the appeal without costs on either side since the pursuer had, in
its opinion, been badly treated. Since no detailed reasons were given by the
House for the view that a banker's reference given honestly does not in the
ordinary course carry with it a duty to take reasonable care, that duty being
based on a special relationship, it will not, I hope, be out of place if I express
my concurrence with the observations of Pearson L.J. who delivered the
leading judgment in the Court of Appeal and said : "Apart from authority, I
am not satisfied that it would be reasonable to impose upon a banker the
obligation suggested, if that obligation really adds "anything to the duty of
giving an honest answer. It is conceded by Mr. Cooke that the banker is not
expected to make outside inquiries to supplement the information which he
already has. Is he then expected, in business hours in the bank's time, to
expend time and trouble in searching records, studying documents, weighing
and comparing the favourable and unfavourable features and producing a
well-balanced and well-worded report? That seems wholly unreasonable.
Then, if he is not expected to do any of those things, and if he is permitted to
give an impromptu answer in the words that immediately come to his mind
on the basis of the facts which he happens to remember or is able to
ascertain from a quick glance at the file or one of the files, the duty of care
seems to add little, if anything, to the duty of honesty. If the answer given is
seriously wrong, that is some evidence- of course, only some evidence - of
dishonesty. Therefore, apart from authority, it is far from clear, to my mind,
that the banker, in answering such an inquiry, could reasonably be supposed
to be assuming any duty higher than 'that of giving an honest answer."

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This is to the same effect as the opinion of Cozens Hardy M.R in Parsons v.
Barclay & Co. Ltd.: "I desire for myself to repudiate entirely the suggestion
that when one banker is asked by another for a customer such a question s
was asked here, it is in any way the duty of the banker to make inquiries
other than what appears from the books of account before him, or, of course,
to give information other than what he is acquainted with from his own
personal knowledge ... I think that if we were to take the contrary- view ... we
should necessarily be pulling a stop to that very wholesome and useful habit
by which the banker answers in confidence and answers honestly, to another
banker."

It would, I think, be unreasonable to impose an additional burden on persons

such as bankers who are asked to give references and might, if more than
honesty were required, be put to great trouble before all available material
had been explored and considered.

It was held in Low v. Bouverie, that if a trustee takes upon himself to

answer .the inquiries of a stranger about to deal with the cestui que trust, he
is not under a legal obligation to do more than to give honest answers to the
best of his actual knowledge and belief, he is not bound to make inquiries
himself. I do not think a banker giving references in the ordinary exercise of
business should be in any worse position than the trustee. I have already
pointed out that a banker, like anyone else, may find himself involved in a
special relationship involving liability, as in Woods v. Martins Bank Ltd., but
there are no special features here which enable the appellants to succeed.

I do not think it is possible to catalogue the special features which must be

found to exist before the duty of care will arise in a given case, but since
preparing this opinion I have had the opportunity of reading the speech
which my noble and learned friend. Lord Morris of Borth-y-Gest, has

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prepared. I agree with him that if in a sphere where a person is so placed
that others could reasonably rely upon his judgment or his skill or upon his
ability to make careful inquiry such person takes it upon himself to give
information or advice to, or allows his information or advice to be passed on
to, another person who, as he knows, or should know, will place reliance
upon it, then a duty of care will arise.

I would dismiss the appeal.

Lord Devlin. My Lords, the bare facts of this case, stated sufficiently to raise
the general point of law, are these. The appellants, being anxious to know
whether they could safely extend credit to certain traders with whom they
were dealing, sought a banker's reference about them. For this purpose their
bank, the National Provincial, approached the respondents who are the
traders' bank. The respondents gave, without making any charge for it and in
the usual way, a reference which was so carelessly phrased that it led the
appellants to believe that traders to be Creditworthy when in fact they not.
The appellants seek to recover from the respondents the consequent loss.

Mr. Foster, for the respondents, has given your Lordships three reasons why
the appellants should not recover. The first is founded upon a general
statement of the law which, if true, is of immense effect. Its hypothesis is
that there is no general duty not to make careless statements. No one
challenges that hypothesis. There is no duty to be careful in speech as there
is a duty to be honest in speech. Nor indeed is there any general duty to be
careful in action. The duty is limited to those who can establish some
relationship of proximity such as was found to exist in Donoghue v.
Stevenson. A plaintiff cannot, therefore, recover for financial loss caused by a
careless statement unless he can show that the maker of the statement was
under a special duty to him to be careful. "Mr. Foster submits that this special
duty must be brought under one of three "categories. It must be contractual;

278
or it must be fiduciary; or it must arise from the relationship of proximity and
the financial loss must How from physical damage done to the person or the
property of the plaintiff. The law is now settled. Mr. Foster submits, and these
three categories are exhaustive. It was so decided in Chandlier v. Crane,
Christmas & Co. - and that decision, M r. Foster submits, is right in principle
and in accordance with earlier authorities.

Mr. Gardiner, for the appellants ,agrees that outside contractual and fiduciary
duty there must be a relationship of proximity - that is Donoghue v.
Stevenson - but he disputes that recovery is then limited to loss flowing from
physical damage. He has not been able to cite a single case in which a
defendant has been held liable for a careless statement leading, otherwise
than through the channel of physical damage, to financial loss. But he
submits that in principle such loss ought to be recoverable and that there is
no authority which prevents your Lordships from acting upon that principle.
Unless Mr. Gardiner can persuade your Lordships of this, his case fails at the
outset. This, therefore, is the first and the most fundamental of the issues
which the House is asked to decide.

Mr. Foster's second reason is that, if it is open to your Lordships to declare

that there are or can be special or proximate relationships outside the
categories he has named. your Lordships cannot formulate one to fit the
case of a banker who gives a reference to a third party who is not his
customer; and he contends that 'your Lordships have already decided that
point in Robinson v. National Bank of Scotland Ltd. His third reason is that if
there can be found in cases such as this a special relationship between
bankers and third parties, on the facts of the present case the appellants fall
outside it; and here he relies particularly on the fact that the reference was
marked "Strictly confidential and given on the express understanding that we
incur no responsibility whatever in furnishing it."

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My Lords, I approach the consideration of the first and fundamental question
in the way in which Lord Atkin approached the same sort of question - that is,
in essence the same sort, though in particulars very different - in Donoghue
v. Stevenson. If Mr Foster's proposition is the result of the authorities, then,
as Lord Atkin said, "1 should consider tile result a grave defect in the law,
and so contrary to principle that I should hesitate long before following any
decision to that effect which had not the authority of this House." So before I
examine the authorities, I shall explain why I think that the law, if settled as
Mr. Foster says it is, would be defective, As well as being defective in the
sense that it would leave a man without a remedy where he ought to have
one and where it is well within the scope of the law to give him one, it would
also be profoundly illogical. The common law is tolerant of much illogicality,
especially on the surface; but no system, of law can be workable if it has not
got logic at the root of it.

Originally it was thought that the tort of negligence must be confined entirely
to deeds and could not extend to words. That was supposed to have been
decided by Deny v. Peek.281 I cannot imagine that anyone would now
dispute that if this were the law, the law would be gravely defective. The
practical proof of this is that the supposed deficiency was in relation to the
facts in Derry v. Peek immediately made good by Act of Parliament. Today it
is unthinkable that the law could permit directors to be as careless as they
liked in the statements they made in a prospectus.

A simple distinction negligence in word and negligence in deed might leave

the law defective but at least it would be intelligible. This is not however, the
distinction that is drawn in Mr. Foster's argument and it is one which would
be unworkable. A defendant who is given a car to overhaul and repair if
necessary is liable to the injured driver (a) if he overhauls it and repair it
negligently and tells the driver it is safe when it, is not; (b) if he overhauls it
and negligently finds it not to be in need of repair and tells the driver it is

280
safe when it is not; and (c) if he negligently omits to overhaul it at all and
tells the driver that it is safe when it is not. It would be absurd in any of these
cases to argue that the proximite cause of the driver's injury was not what
the defendant did or failed to do but his negligent statement on the faith of
which the driver- drove the car and for which he could not recover. In this
type of case, where if there were a contract there would indoubtedly be a
duty of service, it is not practicable to distinguish between the inspection or
examination, the acts done or omitted to be done, and the advice or
information give. So neither in this case nor in Chandlier v. Crane, Christmas
& CO282,( Denning L. noted the point where he gave the example of the
analyst who negligently certifies food to be harmless) has Mr. Foster argued
that the distinction lies there.

This is why tile distinction is now said to depend on whether financial loss is
caused through physical injury or whether it is caused directly. The
interposition of the physical injury is said to make a difference of principle. I
can find neither logic nor common sense in this. If irrespective of contract, a
doctor negligently advises a patient that he can safely pursue his occupation
and he cannot and the patient's health suffers and he loses his livelihood,
the patient has a remedy. But if the doctor negligently advises him that he
cannot safely pursue his occupation when in fact he can and he loses his
livelihood, there is said to be no remedy. Unless, of course, the patient was a
private patient and the doctor accepted half a guinea for his trouble: then
the patient can recover all. I am bound to say, my Lords, that I think this to
be nonsense. It is not the sort of nonsense that can arise even in the best
system of law out of the need to draw nice distinctions between borderline
cases. It arises, if it is the law, simply out of a refusal to make sense. The line
is riot drawn on any intelligible principle. It just happens to be the line which
those who have been driven from the extreme assertion that negligent
statements in the absence of contractual or fiduciary duty give no cause of
action have in the course of their retreat so far reached.

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I shall now examine the relevant authorities, and your Lordships will, I hope
pardon me if with one exception I attend only to those that have been
decided in this House, for I have made it plain that I will not in this matter
yield to persuation but only to compulsion. The exception is the case of Le
Lieure v. Gould, for your Lordships will not easily upset decisions of the Court
of Appeal if they have stood unquestioned for as long as 70 years. The five
relevant decisions of this House are Derry v. Peek, Nacton v. Lord Ashburton,
Robinson v. National Bank of Scotland Ltd., Donoghue v. Stevenson,. The
Greystoke Castle. The last of these I can deal with at once, for it lies outside
the main stream of authority on this point. It is a case in which damage was
done to a ship as the result of a collision with another ship. The owners of
cargo on the first ship which cargo was not itself damaged thus became
liable to the owners of the first ship for a general average contribution.

They sued the second ship as being partly to blame for the collision .Thus.
they were claiming for the financial loss caused to them by having to make
the general average contribution although their property sustained no
physical damage. This House held that they could recover. Their Lordships
did not in that case lay down any general principle about liability for financial
loss in the absence of physical damage; but the case
itself makes it impossible to argue that there is any general rule showing that
such loss is of its nature irrecoverable.

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