LAW OF NEGLIGENCE

Development of Law of Negligence:

We are going to examine cases on the development of the notions of negligence on

a case to case basis. In each you will be required to know the    parties,   the
citation of the case,  judges  (judge),  the material facts, issue (s),   arguments by 
parties   and  the basis of  their argument, the actual decision of the court
(holding)  and the reasons for so holding (ratio decidendi) and other rules by the
Court, orders and the use of precedents . You should at the end of the day
determine the types of reasoning involved and where the case takes you from there
(i.e. what is the future value of the (case)). Summaries presented should not be an
excuse for not reading the case which is herein extracted for you.

A CASE DECIDED ON THE BASIS OF IMPLIED CONTRACT WARRANT AND

KNOWLEDGE OF THE USER WHERE THE ARTICLE IS NOT DANGEROUS IN ITSELF.

LANGRIDGE V.  LEVY [1837] 2M & W 519

The material facts were that the father of the plaintiff went to the defendant who
was the seller of guns to buy a gun for himself and his sons. While at the shop of
the defendant he made a representation to the seller that the gun was for himself
and his sons and in inducing the sale the defendant warranted that the gun was
safe and secure while it was not. In the process of the son using the gun so
purchased, sustained injuries and brought an action against the seller

Issue: Whether the  seller was  liable? 

Argument by counsel for the Plaintiff;

Wherever a duty is imposed  upon a person contract or otherwise , and that duty is
violated, anyone who is injured by the violation of it may have a remedy against the
wrong doer

Argument by counsel for the defendant:

There was no privity (a relation between two parties that is recognized by law, such
as that of blood, lease, or service) of contract and therefore the plaintiff was not
entitled in law to recover any damages.     

Ratio decidendi: Where the defendant knowingly sold a gun to the father for the
use of himself and his sons and had knowingly made a false warrant that it is safe
and secure while it was not, and on the basis of such warrant the plaintiff used it to
his detriment the defendant is liable.

In the course of delivering the judgment a number of things were considered:

i). The Court was not ready to lay down a broad rule of liability.
ii). The court considered the fact that the gun was not an instrument which is
dangerous in itself unless loaded:

Dangerous in itself, but requires an act to be done that is, to be loaded, in order to
make it so, had been simply delivered by the defendant, without any contract or
representation on his part, to the plaintiff, no action would have been maintainable
for any subsequent damage which the plaintiff might have sustained by the use of
it.

The Court made use of the principle in Pasley V. Freeman TR 51 that mere
falsehood is not enough to give a right of action , but it must be a falsehood told
with an intention that it should be acted upon by the party
What the court was trying to insist on is that an injured person must establish that
the person who is said to have caused injury was such a person as recognized by
the law not to act the way he did.

IMPORTANT:

You should bear in mind the following questions when reading the judgment of
Langridge V. Levy:

i). Was negligence a factor in this case?

ii). What was the false representation upon which this decision rested ?

iii). To who was the representation made?

iv). Did the defendant know that the plaintiff would be likely to use the gun ?

v). Was the gun a dangerous thing?

vi). What limits did the Court set to the doctrine of liability established in this
case?

vii). Why the false representation was called a fraud?

A CASE IN WHICH THE COURT DECIDED THAT THE INJURED PARTY WAS TOO
REMOTE TO BE CONTEMPLATED BY THE DEFENDANT .

Back to Contract

WINTER BOTTOM V. WRIGHT [1842] 10 M+W 109

Material facts
 i). Contracted with the Postmaster General to provide a mail coach to convey
mail bags along a certain line of the road and
ii). Other also contracted to hire horses to coach along the same line, at the
same time B. and his process of driving the coach C. got injured and brought
an action against A. for damages due to injury sustained in the cause of
driving the coach which broke down due to latent defects in its construction.

Issue: Whether the (defendant) was liable?

Argument by counsel for the defendant

He objected that the declaration was bad in substance. According to him the
general rule was that whenever a wrong arises out of a breach of contract , only the
party to the contract can… The purpose was to limit extension of liability to even
those who were no privy to the contract.

Argument by the Counsel for the plaintiff:

The counsel for the plaintiff based his argument on the decision of Langridge V.
Levy. He tried to show that the defendant had entered into contract with a public
officer to supply an article, which from its nature and use ... was necessarily to be
used by the plaintiff. On the basis of this it was sufficient to bring this case within
the rule reestablished by Langridge V. Levy which proceeded on the ground of
knowledge and fraud: in that in this case the defendant made a representation that
the coach was in a proper state for use.

Holding: Judgment for the defendant:

Ratio decidendi: Where there is no contract or the injured party is no privy to it no

action will lie (or be maintained).
Lord Abinger C.B. stated Inter Alia:

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 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 Langridge V. Levy 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 favor; 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 everybody who might use the carriage. If there had
been any ground for such action, there certainly would have been some precedent
of it; but with the exception of actions against inn keepers, and some few other
persons, no cause of a similar nature has occurred in practice:

Important: The rule in Langridge V. Levy cannot be applied in Winterbottom V.

Wright because as Lord Abinger C B seems to suggest Winterbottom and Wright is
a case of its own kind.

Lord Alderson, B had the following to say:

I am of the same opinion. 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 to 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. [Pg 68 of the
report]  [Emphasis supplied].
Rolfer, B. had the following to say:

This is one of the unfortunate cases in which there certain has been damnum
absque injuria (damage without wrongful act); it is so, no doubt, a hardship upon
the plaintiff to be without a remedy, but by that consideration we ought not to be
influenced. Hard cases, as it has been frequently observed, are apt (have a tendency)
to introduce bad law. [Emphasis added].

All the judges in this case are in agreement that in the circumstances of the day the
plaintiff could not recover because he was not a party to the contract. He was a
stranger in so far as the law and the defendants were concerned.

Important: Below are questions which are relevant to you when reading the case of
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 any one?

4. How was Langridge V. Levy's case dealt with by the Court?

5. Why was the court not prepared to extend liability of the defendant to cover
loss sustained by the plaintiff in the circumstances?

6. Do you think the Court adequately disposed of Peacock's argument?

7. What other important arguments were raised?

A CASE OF A MISFEASANCE (UZEMBE MBAYA)

Nonfeasance is the failure to act where action is required—willfully or in neglect.
Misfeasance is the willful inappropriate action or intentional incorrect action or advice.
Malfeasance is the willful and intentional action that injures a party

FREDERICK LONGMEID  AND  ELIZA (his  wife) V. HOLLIDAY [1851] 6 Ex.  76.

Material facts: The defendant a seller of lamps sold a lamp to the plaintiff's
husband.   The defendant was not a manufacturer of those lamps. The lamps where
called "Holliday's Patent Lamp". The said lamp was for the purpose of being used by
him and his wife. There was evidence that the lamp was defectively manufactured. In
using the lamp exploded and the plaintiff's wife was injured, two plaintiffs brought
an action (Frederick previously recovered damages  in an action for defendant's
breach of implied warranty of sale), jury found all facts for the plaintiffs except for
allegation of fraud  because, in their view the defendant did not know the lamp was
in fact defective

Issues: Whether the plaintiff can recover on the basis of fraud?

Arguments by counsel for the defendant:

As there was no proof of fraud, the action could not be maintained.

 Argument by counsel for the plaintiff:

The defendant was guilty of fraudulent representation in that it was stated that the
lamp was fit and proper for use, which he knew was not true, and that he knew who
was going to use the lamp, which was in fact injured in the process of using the
lamp. This case was in line with the decision in Langridge V. Levy.

Holding: Defendant not liable (Rule absolute)

Ratio Decidendi: Where  in the ordinary cause of doing business between one
individual and another, a machine that is not dangerous in itself but which might
become so by latent defect entirely unknown,     is let or given by one person to
another the  former  is not answerable  to the latter for subsequent damage
accruing from the use of it.

Obiter Dicta (By the way):

a) If the defendant had been guilty of a fraudulent representation that the lamp
was fit and  proper to be used, knowing that it was not and intending it to
be used then that individual would have had an action for deceit on the
principle enunciated in Langridge V. Levy
b) If anyone knowingly tells a falsehood, with intent to induce another to do an
act which results in his loss, then he is liable to that person in an action for
deceit

Parke B enumerated instances besides contract & fraud in which an action might lie
but which can be distinguished from the above case:

a) If an apothecary administers improper medicines to his patients, or a surgeon

unskillfully treated him, and thereby injure his health, he would be liable to
the patient even where the father or friend of the patient may have been a
contracting party with the apothecary or surgeon.
b) 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,
he is liable to him....

c) If a mason contract to erect a bridge or another work of a public road, which

he constructs, but not according to the contract, and the defects of which are
 a nuisance to the highway, he may be responsible for it to a third party, who
is injured by the defective construction ....

d) If anyone 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 another person to whom it is delivered is injured
thereby, or if he places it in a situation easily accessible to a third person who
sustains damage from it

IMPORTANT: BELOW ARE QUESTIONS WHICH YOU MUST KEEP IN MIND WHEN
READING THE ABOVE CASE:

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 the case distinguished from the other referred to which
liability arose independently of contract or fraud ? Why did the courts impose
liability in those cases?

5. Why the lamp was not considered a dangerous object?

IMPORTANT:

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 contract, she cannot sue and join herself with her husband. What
was the nature of the law of the time with regard to married persons? What is the
position of the law today?
A CASE WHERE THE SELLER OF THE ARTICLE THAT CAUSED INJURY WAS ALSO
A MANUFACTURER OF THE ARTICLE AND KNEW WHO THE CONSUMERS WERE
(REPRESENTATION WAS NOT RELEVANT IN THIS CASE).

GEORGE K WIFE V. SKIVINGTON [1869] LR 5 EX 1

Material facts: The plaintiff (Joseph George husband of the second plaintiff)
purchased a chemical compound of the defendant as a hair wash for the use of his
wife. The hair wash was made up of ingredients known only to the defendant and
by him represented to be "fit and proper to be used for washing the hair". There
was also an express statement that the defendant knew the purpose for which the
article was bought. Due to the defendant's "unskillful, negligent and improper"      
make of the compound caused injury complained by the female plaintiff (she lost
her hair or her hair fell off).

Issue: Can third parties be owed duty of care?

Judgment

KELLY CB:

 The Defendant knew that the hair product was meant for the wife.

 His duty extends not only to the purchaser but to the person for whom he

knew the product was intended.

 The Defendant is without question liable in an 'action on the case' for

unskilfulness and negligence in the manufacture of the product.

PIGOTT B:

 The wife cannot contract for herself alone, but that is no reason why the

Defendant’s duty should stop short of her.

 If a salesperson sold a drug with no' knowledge for whom it was intended

and it caused harm, it may have been a different case.

 However, here, there is an "express allegation that the defendant knew the

purpose for which, and the person for whom, this compound was bought".

CLEASBY B:

 In Langridge v Levy, the main legal principle which came out was that:

although no person can sue on a contract except the person with whom the

contract is made, a vendor who is guilty of fraud is liable to whomsoever "has

been injured by that fraud , although not one of the parties to the original

contract, provided at least that his use of the article was contemplated by the

vendor".

 Substitute the word 'negligence' for 'fraud', and this case is exactly the same

as Langridge v Levy. It’s close enough to have the same decision.

 Defendant is liable.

Holding: Judgment for the plaintiffs

Ratio decidendi: Apart from any question of warranty, express or implied there is a
duty on the defendant, the vendor, to use ordinary care in compounding his wash
for the hair. There was such a duty towards the purchaser and it extends to the
persons whose use the vendor knew the compound was purchased.

In Landridqe V. Levy cited as authority for this proposition. Here a similar duty arose
towards the person who was known to the defendant to be about to use this wash
namely a duty that the article sold should be reasonably fit for the purpose it was
bought for and compounded with the reasonable care.

Obiter Dicta:

Kelly, C.B. distinguished the case of Longmeid V. Holliday from this case in that the
former cases decision was not based on the negligence of the vendor.

Piggott B was of the same opinion and he added the following:

a) Where the thing purchased is for the use not of the purchaser himself but, to
the defendant’s knowledge, of his wife; does the defendant’s duty extend to
her? I can see no reason why it should not [The judge points the incapacity of
women to sue on their own in those days which is a reason why a husband
had to be joined with her].
b) Piggott, B advanced yet a contract situation; where a chemist sells to a
customer a drug; without any knowledge of the purpose for which it is to be
applied, which is fit for a grown up person, and that drug is afterwards given
 by the purchaser to a child and does injury, it could not be contended that
the chemist is liable.

c) Cleasby, B. was also of the opinion that the action did   lie  
against the defendant. He stressed the principle of contract by saying: “….No
person can sue on contract but the person with whom the contract is made;
and this is undoubtedly the proposition  attempted
to  be  taken  advantage  of  in Langridge  V. Levy". Then proceeded to apply
the principle to the facts  of  the  case  and  found that there  was Good
cause of action in the person injured similar to that which was held to be
good in Langridge V. Levy.

IMPORTANT;

Below are questions to guide you when reading the case just discussed:

1. Who were the plaintiffs in this case?

2. Who were the parties to the contract?

3. Could a female "plaintiff in 1869

a. Enter into a contract on for herself?

b. Sue in her own name?

See: The Married Women's Property, Act, 1882 (England) 45 & 46 Vict. C 75, (Extract
provided).

4. What damage did the male plaintiff suffer? Why was he a plaintiff?
5. Did the chemist intend to mislead anyone or harm anyone with his product ?
Is the case therefore    exactly the same as that of Langridge V. Levy?
 6. Why is it important that the chemist knew the identity of the ultimate
consumer?

7. What differences were there, if any, in the views of Kelly, CB and Cleansby, B.
as to the ratio decidendi of Langridge V. Lew?

8. Are the reasons advanced by the three judges in support of their decision in
favor of the plaintiffs the same?

9. Was the defendant liable in his capacity as a manufacturer or seller or was

liability dependent on him being both manufacturer and seller?

10. How would the plaintiffs have proved the defendant was negligent?

11. Have the judges taken a step beyond Langridge v. Levy?

12. Do you see a possibility of a case of this kind to occur in the Courts in
Tanzania today? Who are likely to become the main complainants before the
Courts of Law?

A CASE IN WHICH THE JUDGES REACHED THE SAME DECISION BUT USED NOT
ONLY DIFFERENT PRINCIPLES BUT ALSO DIFFERENT PATTERNS OF REASONING.
IMPORTANT FOR THE FUTURE DEVELOPMENT OF THE LAW OF NEGLIGENCE
WAS THE DECISION OF THE MINORITY JUDGE:

HEAVEN V. PENDER [1883) BABD 503

Note:   Material facts in this case will be seen through the eyes of the judges who
decided this case.

Material facts according to the Minority Judge Brett MR were as follows:

The plaintiff was a workman in the employ of a ship painter . The ship painter
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 ship-owner, an ordinary stage to be slung in the ordinary way
outside the ship for the purposes of painting her. It must have been to the
defendant if he considered at all that, the stage would be used by such a person as
the plaintiff (as ship painter). The ropes by which the stage was slung, were
supplied, without reasonable careful attention to their condition. When the plaintiff
began to use the stage the ropes broke, the stage fell and the plaintiff was injured.

Issue: Whether the defendant owned a duty of care to the plaintiff?

Argument in favor of the defendant:

The stage was, through want of attention of the defendant's servants supplied for
use by the plaintiffs but want of attention amounting to want of ordinary care is...
no good cause of action, although injury ensued (happened as a result of..) 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.

Arguments by the plaintiffs:

The defendant did not use ordinary care and skill and because of that the plaintiff
was injured, the type of injury was not caused by the plaintiff's contributory
negligence; therefore the defendant owed a duty of care to the plaintiff.

HOLDING: JUDGEMENT IN FAVOUR OF THE PLAINTIFF.

RATIO DECIDENDI: Whenever one person is by circumstances placed in such a
position with regard to another that everyone of ordinary care (the care that a
reasonable man would exercise under the circumstances; the standard for
determining legal duty) 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 a danger .

METHODOLOGY:

What method did Brett, MR, employ in arriving at such a proposition? Brett, MR
employed a case to case approach and in each case he found a rule and a
combination of these rules leading to a general rule for liability called DUTY OF
CARE which he then deductively applied to the facts situation (A concise description of
all the occurrences or circumstances of a particular case, without any discussion of their consequences

under the law; a summary of what took place in a case for which relief is sought ) of the case he was

to decide. This is the process of Inductive Reasoning and after a general rule has
been ascertained then it is applied by a process of deductive reasoning . In real
terms he considered the following facts situations:

i). Two drivers meeting have a contract with each other

ii). A railway company which has contracted with one person to carry another has
not only a contract with the person carried but has also a duty towards that
person.

iii). The owner or occupier of house or land who permits a person or persons to
come to his house or land has no contracts with such a person or persons
but has a duty towards him or them.

Thus Brett, MR maintained "the existence of a contract between persons does not
prevent the existence of the suggested duty towards him or them , raised by law
independently of the contract, but the facts with regard to which the contract is
made and to which it applies in exactly similar but a contract of duty ".

Brett, MR. Ruled out certain considerations:

 We have not in this case to consider the circumstances in which an implied

contract may arise to use ordinary care and skill to avoid danger to the safety
of person or property.
 We have not in this case to consider the question of fraudulent
misrepresentation express (terms and conditions are spelled out in the contract, either
verbally or in writing) or implied (terms and conditions are inferred by the actions of
the parties involved) which is a recognized head of law.

What is then to be solved?

What is the proper definition of the relation between two persons other than the
relation established by contract, or fraud, which imposes on one of them a duty
towards the other to observe, with regard to the person or property of such other,
such ordinary care and skill as may be necessary to prevent injury to this person or
property. Does the present case fall within such a definition?

The judge re-examined his examples as enumerated earlier and had the following to
say:

When two drivers or two approaching each other, such duty arises between them
when ships are approaching each other in such a manner that, unless they use
ordinary care and skill to avoid it, there will be danger of injurious collision between
them. The  relation is established in such circumstances between them, not only if it
is 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 anyone of ordinary
sense who did think would at once recognize that if he did not use ordinary care
and skill under such circumstances there would be such a danger. And everyone
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:

The judge went on to enumerate what would happen in the case of Railway
Company as follows:

In the case of a railway company carrying a passenger with whom it has not entered
into 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 a passenger must be
endangered.

He said the following in relation to an owner or occupier:

With regard to the condition in which an owner or occupier leaves his house or
property. 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 inviter the duty of using reasonable care to keep his house or
warehouse that it may not endanger the person or property of the person invited. If
you permit a person to enter then you impose on yourself a duty not to lay a trap
on him.

Having considered all these instances which impose a duty to take care and skill,
Brett, MR concluded as follows:

It follows, as it seems to me, that there must be a more remote and larger
proposition which involves and covers both sets of propositions lead to exactly
similar minor premises there must be a more remote and larger premises which
embraces both of the major propositions.
The proposition which seem to be in line with decided cases on supply of goods
or machinery or the like was stated as follows:

Whenever one person supplied goods or machinery, or the like, for the purpose of
them being used by another person under such circumstances that everyone of
ordinary sense would, if he thought, recognized at once that unless he used ordinary
care and skill with regard to the condition of the thing supplied or mode of
supplying it, there will be danger or injury to the person or property of him for
whose use the thing is supplied, and who is to use it a duty arises to use ordinary
care and skill as to the condition or manner of supplying such a thing .

What follows is consideration of "the judgement of the majority of the judges

Cotton and Bowen LJJ. The ratio decidendi of this case is based on the notion of
owner- invitee relationship 2 judges against 1 found the defendant liable.

Decision of Cotton, LJ and Bowen, L.J. restricted itself to the category of owner
invitee relationship:

Important:

Below are guide questions when reading the CASE of, Heaven v. Pender, [1883] 11
QBD 5D3.

1. Did the defendant know who was going to use the stage ?
2. Was the element of fraud stressed here?

3. What was the decision in this case? Was it that was laid down by Brett, M.R.?

4. What was the ratio decidendi of this case?

 5. What is the difference in the reasoning of the judges in this case do you
perceive?

6. What remarks of Cotton L. J. would you consider to be Obiter dicta (by the
way)?

THE FIRST CASE OF NEGLIGENT STATEMENTS CAUSING FINANCIAL LOSS:

DERRY AND OTHERS V. PEEK (1889) 14 App. Case 337 Material facts:

By a special Act 45 & 46 Vict., C. Clix the Plymouth Devonport and District Tramways
Company was authorized to make certain tramways. By S. 35 the carriages used on
the tramways might be moved by 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 Tramways Act, 1870 (33 & 34 viet. C 78)
which section in the special Act "all carriages used on any tramway shall be moved
by the power prescribed by special Act, and where no such power rise prescribed, by
animal power only".

The appellants as directors of the company issued a prospectus which encouraged

people to invest in it because by the special Act of Parliament the company had a
right to use steam or mechanical motive power, instead of horses. As soon as the
prospectus was issued, the respondent relying upon a paragraph in the prospectus
applied and obtained shares in the company. The company proceeded to tramways,
but the Board of Trade refused to consent to the use of steam or mechanical power.
In the result the company was wound up and the respondents brought an action of
deceit against the appellants claiming damages for fraudulent misrepresentation of
the defendants whereby the plaintiff was induced to take shares in the company. In
the High Court the action was dismissed by Stirling, J. Appeal to the Court of
Appeal.

Issue: Whether an action of fraudulent misrepresentation would lie?

The Court of Appeal held that (Cotton, L.J., Sir Hannen, J. and Lopes, L.J.) the
defendants were liable to make good to the plaintiffs the loss sustained by taking
the shares. The defendants appealed to the House of Lords.

Holding:   Appeal allowed, order of Court of Appeal reversed. Ratio Decidendi (the
rationale for the decision or the rule of law on which a judicial decision is based): In
an action of deceit the plaintiff must prove actual fraud that is a false representation
made knowingly, or without belief in its truth or recklessly, without caring whether it
be true or false and intending the plaintiff to act upon it.

Other observations by the House of Lords:

A false statement, 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 very different thing from fraud, and the same may be said of a false
representation honesty believed though on insufficient grounds.

The Court was saying that there is a distinction in law between false representations
and fraud or deceit and whoever wants to base an action on false representation
must prove actual deceit.
Important: Below are guide Questions when reading the Case of Derry V. Peek:

1. Was there a contract between the plaintiffs and the defendants?

2. Did the defendants act negligently in making the statement?

3. Does the House of Lords say there can be no recovery at all for negligent
misstatement?

4. Did the plaintiff sue in negligence?

5. What then is the ratio?

6. Why didn't the Plaintiff change his statement of claim from deceit to some
other cause of action?

A case in which the decision of the House of Lords in Derry V. Peek was put to
test and Lord Esher (Former Brett, MR) MR rejected to apply his own notion of
duty of Care he expounded in Heaven V. Pender

LE LIEVRE & DENNES V. GOULD, [1893J 1 QB 491.

MATERIAL FACTS:

H, owner of land, arranged with D for a loan to be paid to L, a builder, on the

security of a mortgage of the land (a legal agreement by which a bank, building
society, etc. lends money at interest in exchange for taking title of the debtor's
property, with the condition that the conveyance of title becomes void upon the
payment of the debt). The money was to be paid by installments at certain stages in
the progress of buildings to be erected on the land by L, and the stages were to be
certified by an Architect. H. asked the defendant, G, who was an architect and
surveyor to issue these certificates.
In the process D transferred the mortgage to L after four installments had been paid
on certificates furnished by G. In due course the plaintiffs lost money on this
transaction and sued for damages.

ARGUMENT BY THE PLAINTIFFS:

H in employing G to issue certificates and in preparing the schedule of advances,

was acting as the agent of the plaintiff D. The certificates given were in fact to the
knowledge of G and if there were no  fraud on his part the defendant did not use
due care, skill and diligence to ascertain whether the facts of the certificates were
true. In so giving the certificates the defendant acted with gross negligence, and in
breach of the duty which he owed to the plaintiffs.

ARGUMENT BY THE DEFENDANT WERE THAT:

The defendant denied that he had been employed by D or on his behalf to issue
certificates. He never undertook any duty towards the plaintiffs or either of them. He
was not fraudulent, the certificates were issued bonafide and in belief that the
statements contained in them were true.

HOLDING: APPEAL WAS DISMISSED. JUDGEMENT IN FAVOUR OF THE DEFENDANTS .

Ratio Decidendi: The question of liability for negligence cannot arise at all until it is
established that a man who has been negligent owed some duty to the person who
seeks to make him liable for negligence.

Obiter Dicta:    Decision of Heaven V. Pender

Observations:

1. The Judgement of Lord Esher (Former Brett MR) MR. reveals the following:
 i). A duty cannot arise unless there is relationship of the parties through
contract (What duty is there when there is No relation between the
parties by contract?)

ii). A man is entitled to be as negligent as he pleases to the whole world if

he owes no duty to them.

iii). The case of Heaven V. Pender has no bearing on this case.

iv). That case established that in the absence of contract, an action for
negligence cannot be maintained when there is no fraud. Negligence,
however great, does not of itself constitute fraud

2. According to Bowen, L.J. in Perry V. Peek the House of Lords pointed out
that;

i). As common law lawyers had always held, an action of deceit must be
based upon fraud, and that negligence is not itself fraud, although
negligence in some cases may be of such a kind as to make it highly
probable that there has been fraud

ii). 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.

iii). We however, have to consider not what the law might be, but what it
is. (This is as positivistic utterance by the judge).

iv). 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 a paper is like a gun or other  
dangerous instrument and unless it is intended to deceive, the law
does not, in the absence of contract, hold him responsible for drawing
his certificates carelessly.

3. In the Opinion of A. L. Smith L. J. The decision of Heaven V. Pender was

founded upon the principle, that a duty to take due care did arise when a
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 does not go further than this. The case is totally
different from the present and its principle cannot be applied to it.

IMPORTANT: BELOW ARE GUIDE QUESTIONS WHEN READING THE CASE OF LE

LIEVRE V. GOULD:

1. What does fraud means?

2. Has Lord Esher M. R (Former Brett MR) changed his mind in Le Lievre V.
Gould's case since his decision in Heaven V. Pender?

3. What are the two ratio decidendi of the decisions?

4. Do you agree with Lord Esher M.R. and Bowen, L.J. that Perry V.  Peek
impliedly overruled Gran V. Wilson [1888] 39 Ch. D. 39 D. 39 and made it
possible to apply Lord Esher MR's Heaven V. Pender principle to negligent
acts? Was not Langridge V. Levy concerned with, statements?   Be do you
reconcile Langridge V.  Levy and Perry V.Peek?

NOTE ON PRECEDENT:

Le Lievre V. Gould:
According to the strict rule of precedent, the English Court of Appeal must
generally follow its own previous decisions   i.e. it is bound by the ratios of its own
previous cases.   So in this case, the court is bound by ratio of HVP. We saw that
strictly, the ratio of HVP must be the rule of the majority of Judges: Cotton &
Bowen. Neither Brett's formulation of the larger proposition, nor his formulation
of supplier’s liability is therefore the ratio, nor part of the ratio. But does the Court
in Lievre V. Gould adhere to these strict rules? Esher (Brett M.R   refers to what  
HVP established, meaning his own minority rule. Smith, L.J. also refers to Brett's Rule
as the principle of HVP. Only Bowen, L.J. refers to the ratio of HVP as the majority
rule i.e. the rule as to Owner of premises.

But before we conclude that the Court is not adhering to the strict doctrine, we
should remember that they do not in fact prefer the minority rule of HVP to the
majority rule. They reject both as applying to the facts before them, the law does
not, in the absence of contract, hold him responsible for drawing his certificates
carelessly.

NOCTON V LORD ASHBURTON

Lord Ashburton bought a property for £60,000 on Church Street, Kensington,

London. His solicitor (a member of the legal profession qualified to deal with
conveyancing, the drawing up of wills, and other legal matters. A solicitor may also
instruct barristers and represent clients in some courts ) was Nocton who advised
him to seek the release (lease or sell) part of the house (which was also security for
a mortgage). This was a bad idea, because as Nocton in fact knew, this meant that
the security would become insufficient. Lord Ashburton alleged the advice was not
given in good faith, but rather in Mr. Nocton's self-interest. 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 knowingly that the security would be
rendered insufficient and that it had been given in Nocton's interest and not in his
client's interest.

In the first instance the Court found that there had been no fraud, therefore
dismissed the action.

The Court of Appeal reversed that finding and granted relief on the basis that
Nocton had been guilty of actual fraud.

The House of Lords reversed the decision of the Court of Appeal. Held the plaintiff
(a person who brings a case against another in a court of law ) was to succeed on
the basis of a breach of duty which arises out of his fiduciary ( involving trust,
especially with regard to the relationship between a trustee and a beneficiary )
relationship with the plaintiff and of which the plaintiff suffered loss.

Holding: Court of Appeal decision affirmed on different  grounds.

Ratio Decidendi: Where a person renders advice to another and the advisee falls
within a fiduciary relationship with the adviser, in case the advisee sustains loss the
adviser is liable.

Viscount Haldanel L.C. statements are worth noting:

i). Derry V. Peek which establishes that proof of fraudulent intention is necessary
to sustain an action of deceit, whether the claim is dealt with in a Court of
law or by a Court of Equity does not narrow the scope of the remedy.
ii). Are solicitors always subject to fiduciary duties in practicing their profession?

iii). Do you think it was sufficient that the defendant, Nocton, benefited from his
statement?
 iv). What significance did Viscount Haldane L.C. attribute to the findings of fact
by the trial judge? How do you think Donoghue V. Stevenson affects these
cases?

A CASE WHICH FINALLY ESTABLISHES THE CONCEPT OF NEGLIGENCE KNOWN

IN THE LAW OF TORTS TODAY.

This notion introduces three aspects for it to be completed: Negligence consist in

the duty of care, breach of the duty and damage. A person alleging that another
person was negligent must necessarily prove these three things if he is to succeed at
all.

As it will be noted the notion is seemingly broad but cannot be extended to cases
of remoteness i.e. where there is no reasonable foreseeability of the extent of
damage which results in the alleged negligence.

DONOGHUE V. STEVENSON, [1932] AC 562 (HOUSE OF LORDS)

Note: This was an appeal from Scotland (England and Scotland have two different
legal systems).

MATERIAL FACTS: The appellant, a shop assistant sought to recover form the
respondent, an aerated water manufacturer, on the basis that he was negligent and
out of such negligence she was injured by the presence of a snail in a bottle of
ginger beer manufactured by the respondent.

MORALITY & LAW

Neighbor Principle (Biblical but translated into a legal category)

In English law there must be, and is, some general conception of relations giving rise
to a duty of care, of which particular cases found in the books are but instances. The
liability for negligence, whether you style it such or treat it as in other systems as a
species of "culpa" is no doubt based upon a general public sentiment of moral
wrong doing for which an offender must pay. The rule that you are to love your
neighbor becomes, in law, you must not injure your neighbor: and the lawyer's
question of who is my neighbor? (Emphasis added) 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 neighbor”.

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.

According to Lord Atkin this is the principle enunciated in Heaven v. Pender by Lord
Esher M. R. (then Brett MR) when it is limited by the notion of proximity introduced
by Lord Justice A. L. Smith in Le Lievre & Dennes V. Gould where Lord Esher MR
stated inter alia that:

That case establishes that under certain circumstances, one 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 injure his property.

Lord Justice A. L. Smith maintained:

The decision of Heaven V. Pender was founded upon the principle that a duty to
take due care did arise when the person or the property of another that, if due care
is not taken, damage might be done by one to the other.

In the view of Lord Atkin these principles sufficiently establish the rule of proximity.
This proximity is not confined "to be physical proximity”, but is used to extend to
people/property who are so closely and directly affected by my act or omission 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.

A CASE IN WHICH THE PRINCIPLE OF PROXIMITY ENUNCIATED IN DONOGHUE

V. STEVENSON COULD NOT BE APPLIED BECAUSE THE HUSBAND OF THE
PLAINTIFF HAD HAD A CHANCE OF INTERMEDIATE INSPECTION OF THE
MACHINES WHICH CAUSED HIS DEATH.

Scrutton L.J. in this case makes it explicit that English judges in making decisions are
controlled by the facts before them.

FARR v. BUTTERS BROS & COMPANY [1932] 2 K.B. 66.

Note:   Between the date of the judgment given by McCardie J and the hearing of
the appeal, the House of Lords had delivered a very important judgment in M.
Alister v. Stevenson. How   far   was   this   case affecting the decision in the
present case?

MATERIAL FACTS:   The action of the appeal arose under the Fatal Accidents Act,
1846, by a 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 was brought
against the manufacturer of the crane, who sold it in part 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 was clear that two of the cog-wheels used
in the working of the crane did not fit accurately. All agreed that the deceased while
the crane was being assembled, ascertained that the cog-wheels did not fit properly,
their inaccuracy was such that the crane was working with unusual fitness, 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 it might be
corrected, and that he said, that he would report the matter  to his principals. In  
spite of this discovery, marking, 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 by the jib, killed by its fall, the falling being due to
the effect of the inaccuracies which he had discovered.

ISSUE: Whether there was liability on the part of the manufacturers to the employee

of the purchaser? Was there liability in Tort?

ARGUMENT BY THE DEFENDANT: Having manufactured and supplied the part of

the crane to the purchasers there was an opportunity for examination in that the
purchasers were 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.
Therefore, the manufacturers were not liable.

ARGUMENT BY THE PLAINTIFFS: The defendants had been negligent in

manufacturing the cranes whose parts killed husband of the plaintiff and therefore
they were liable to in tort (a wrongful act or an infringement of a right (other than
under contract) leading to legal liability).

HOLDING: Appeal was dismissed.  Judgement in favor of defendants.

RATIO DECIDENDI:
Important Observations made by Scrutton L. J. in this case:

1. There was an opportunity for examination "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”.
2. Scruton L. J. agreed with Lord Atkin that: It is of importance to guard against
the danger of stating propositions of law in wider terms than 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.

Thus he further states his own famous proposition ( a statement or assertion that
expresses a judgement or opinion) on the way English judges operate: “English
judges have been shown in stating principles going far 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 case”.

In the case in point the judge goes with the opinion of Lord MacMillan that
responsibility ceases when control ceases (no proximity) : 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 manufacturer's product before
he reissues it to the actual user.
IMPORTANT:

Below are questions to guide you reading of the case:

1. Why did Scrutton L. J. say that Lord Atkin's proposition was wider than
necessary?
2. What is the ratio of Farr V. Butters? Did Scruton L. J. Attempt to qualify
Donoghue V. Stevenson’s case, if so, how?

3. Was liability avoided in this case because an intermediate examination could

have been carried out or because such examination was actually carried out
disclosing the defect?

4. If the latter represent true facts, were the statements of Scruton L. J. as to the
effect of the law in the former situation ratio or dicta?
A CASE IN WHICH COUNSEL FOR THE DEFENDANT SOUGHT TO DRAW A
DISTINCTION BETWEEN AN ARTICLE WHICH IS CONSUMED INTERNALLY
CAUSING INJURY AND AN ARTICLE WHICH IS USED EXTERNALLY CAUSING
INJURY.

He in fact was saying that Donoghue v. Stevenson’s decision was no authority on

this case.

GRANT V.  AUSTRALIAN KNITTING MILLS (1936) AC 85

MATERIAL FACTS:

The appellant contracted dermatitis of an external origin as a result of wearing a

woolen underpants which, when purchased from the retailers, was in defective
condition owing to the presence of excess sulphites, which, it was found, had been
negligently left in it in the process of manufacture. The appellants claimed damages
both against retailers and manufacturers.

ISSUES:

 Whether the manufacturers were liable tort and the retailers in contract?  
 Whether the principle of Donoghue v. Stevenson is applicable to this case?

 Argument advanced by the plaintiff was that the decision of the House of  
Lords in Donoghue v. Stevenson was binding on the Court to follow.

 Argument by the Defendant was that Donoghue v. Stevenson's case was a

case of food or drink to be consumed internally, whereas the pants were worn
externally. That while in Donoghue’s Case the makers of the ginger-beer had
retained "control" over it in the sense that they had placed it in stoppered
 sealed bottles, so that it would not be tampered with until it was opened to
be drunk, the garments in question were merely put in 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
separately, so that they would be exposed to the air.

 It was further argued 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
manufacturer, still, the mere possibility, and not the fact, of their condition
having changed was sufficient to distinguish Donoghue’s 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.

 Lastly it was argued that if the decision of Donoghue's Case were extended
even a hair's breadth, no line could be drawn, and manufacturer's liability
would be extended indefinitely.

HOLDING: The case came within the principle of Donoghue's case, decision against
the respondents appeal allowed with costs.

RATIO DECIDENDI: A person who for gain engages in the business of

manufacturing articles 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

Lord Wright in this case considered a number of things:

1. Negligence is found as a matter of inference (a conclusion or opinion that is

formed because of known facts or evidence ) from the existence of the defects
 taken in connection with all the known circumstances even if the
manufacturer could by apt (suitable) evidence have rebutted (claim or prove
that) that inference they have not done so.
2. It is clear that the decision of Donoghue V. Stevenson treats negligence,
where there is a duty of care, as a specific tort (a wrongful act or an
infringement of a right (other than under contract ) leading to legal liability) 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 deduced.

3. It is, however, essential in English Law that the duty should be established.

The mere fact that man is injured by another's act gives in itself cause of  
action:   if  the  act is deliberate; the  party injured will have no claim in law
even thou the  injury  is  intentional,   so  long  as the other   party  is
merely exercising a  legal right; if act involves  lack of due care, again no case
actionable negligence will arise unless the duty to be careful exists.

4. If the term "proximity" is to be applied all, it can only be in the sense that the
want care, and the injury are in essence directly and intimately connected ;
though there may be intervening transactions of sale and purchase, an
intervening handling between those two events a themselves unaffected by
what happened between them: "proximity" can only properly be used if we
can exclude any element of remoteness, or of some interfering
complication between the want of care and the injury

5. Equally also may the word "control" embrace, thou it  is conveniently used in
the opinions Donoghue’s case to emphasize the essential fact that the
 consumer must use the article exactly as it left the maker, that is 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.

6. Duty is difficult to define, because when the act of negligence in manufacture

occurs there is no specific person towards whom the duty could be said to
exist…the duty cannot at the time of the manufacture be other than potential
or contingent, and only can become vested by the fact of actual use by a
particular person.

7. In Donoghue's case 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

8. The principle of Donoghue’s 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.

Below are questions to guide you in reading the case:

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

2. Must the defect in the article be latent (hidden or concealed)?

3. What is the logical argument for extend of liability from an article of drink to

clothing?

4. What did the plaintiff have to prove towards establishment of negligence on

the part of the defendants?
 5. Did Lord Wright consider the possibility of intermediate examination which
did not affect the purpose for which the product was produced w avoid a
duty of care arising?

6. Did the possibility of a third party tampering the product produce a duty of
care being owed the manufacturer?

7. Was the Privy Council bound to follow the decisis of the House of Lords in
Donoghue V. Stevenson?

8. Do you think the idea of "intermediate examination severely limits the impact
of Donoghue v. Stevens and Grant v. Australia Knitting Mills changed?

Note on Precedent:

We can say that G v. AKM explains D. v. S in such a way that it would make it more
difficult for future judges limit    its application e.g. – see the treatment control,  
duty etc. The PC (Privy Council) rejects various limitations that might be put on the
principle. It also supports Atkin's neighbor principle in that the PC discusses the  
general duty i.e.   The elements of negligence are not merely manufacturers' liability.

I notice that although the PC is not bound by the HL [decision of D v. S.], the court
still argues as to whether distinctions should be drawn. In strict precedent theory,
since PC is not bound by even the ratio of D v. S. it is not necessary to distinguish,
or extend the ratio the facts in G. v. AKM in order to decide that case. This   form  
of   argument   is   adopted;

However for two (2) reasons:

 1. That courts will argue on authority i.e. previous decisions, even though they
are not binding. They seek to follow predictable paths, not to make random
decisions.
2. Distinguishing may have at least two functions. It is sometimes a technical
device used by a judge, who is bound by a previous decision, for narrowing
the ratio until it no longer applies to his case - what Glanville
Williams calls "restrictive distinguishing". Used in this way, the distinction
may be sensible or not, - it may be admitted to be illogical or irrational - see
Claytan v. Woodman.

OR, 

It may simply be a rational method of testing a  legal rule, so that we say the
rule is established in fact in situation A, and does it still
make sense in fact situation B?  e.g.   (See Hedle v Byrne). If there is a rule
that a doctor, who tells a patient he is fit for work and the patient  is
not,  and suffers ill health and financially,   is liable; does it make sense to say
the doctor should not be liable if he advices him wrongly not to work, and he
stays away from work losing only money. The distinction is rejected irrational,
the doctor's error is equally worth morally, of blame in both cases, the same
socio interest in compensation for loss is involved both situations. Although
we see that the fact are different we can see no reason to treat them
differently.

QUESTIONS:

1. Is it sufficient for a manufacturer,   in defending himself against an action of

negligence by consumer  merely to  show  that the method used to
manufacture the article was not negligent, that normally, the garments went
 through a process of washing to remove harmful  substance (although  this  
particular  garment  was  defecti because  somehow  it was not treated  as 
the  other garments were). What does this case lay down the rule of law on
this point?
2. The definition of relationship given by the coi is quite vague. Why did they
not define it mc accurately?  Could they have done so?

A CASE OF NEGLIGENT STATEMENTS CAUSING FINANCIAL  LOSS

It was the first case of negligent statements after the decision of the House of Lords
in Donoghue v. Stevenson, [1932] AC. 562.

CANDLER V.  CRANE CHRISTMAS.   [1951] 2 kb 164

Material facts:

The plaintiff invested money in a company relying on accounts put before him by
accountants. The accounts were wrong and negligently prepared. The plaintiff lost
money and sued the accountants.

Issue: Whether the defendants were liable in Tort (a wrongful act or an infringement
of a right (other than under contract) leading to legal liability) of negligence?

ARGUMENT BY THE PLAINTIFF'S COUNSELS was based on the decision of House

of Lords in Donoghue's case namely that since that decision there was   no  
distinction between negligent manufacture causing physical harm and negligent   
statements leading to financial loss. Defendants were liable.

ARGUMENTS BY THE COUNSEL FOR THE DEFENDANTS:  were that there was no
cause of action, that is, no liability in tort for negligent misstatement. Further that
there was no liability in tort for negligent statements causing financial loss as
opposed to physical harm, and further that the accountants were liable in contract
to the company and not liable to the plaintiffs in tort.

HOLDING: The Court of Appeal held in favor of the defendant in that they were not

liable (majority 2 to 1)

Ratio Decidendi: There is no duty of care in negligence as for negligent mis-

statement.

Obiter Dictum; a judge's expression of opinion uttered in court or in a written

judgement, but not essential to the decision and therefore not legally binding as a
precedent

Obita Dicta:

Important in this case is the dissenting (holding or expressing opinions that are at
variance with those commonly or officially held) Judgment of Lord Denming L. J.
which sought to make it clear that since the House of Lord's decision in Donoghue's
case no distinction existed between negligent manufacture causing physical injury
and negligent statements causing economic loss.

Lord Denning, L. J. maintained that the case of Donoghue v. Stevenson, had

substantially changed the law. It did cast doubt on the authority of older cases such
as Lelivre v. Gould which negative actions in tort for negligent misstatements. He
was urging the court to accept that there was a cause of action for "negligent
misstatements”. Lord Denning dealt with the arguments by the Counsel for the
defendant in the following manner:

1. On the argument that there was no cause of action (is a set of facts sufficient
to justify a right to sue to obtain money, property, or the enforcement of a
 right against another party), that is, no liability in tort for negligent
misstatements, Lord Denning answered that such an argument was not
maintainable because there was need for progress in law rather them
stagnation.
2. On the argument that there is no liability in tort for negligence acts (or
statements) causing financial loss as opposed to physical harm, Lord
Denning's reply was that, the Counsel did not dispute that there would be
liability in two hypothetical cases (i) the analyst who tests food and
negligently states that it is wholesome, whereas it is harmful, and the man
whose job is to inspect lifts, who negligently states that a lift is safe when it is
not. It might have been that the counsel only accepted those hypothetical
cases on the ground that they were both cases of physical harm , resulting
from negligent misstatements and that on the facts of this case, there being
no physical damage, and they would not make the defendant liable . He thus
retreated from his earlier position that there was no liability for negligent
misstatements in tort at all, to the position that there was only liability if such
statements resulting to physical harm, but not otherwise.

In Lord Denning's view there is no distinction between physical harm and financial
loss in relation to duty of care. It might be more difficult to prove the proximate
relationship, that is foreseeability of damage, in the case of purely financial loss, but

that is a matter of proof in each case.

3. Dealing with the third argument of the Counsel for the defendant, namely, that the
accountants were liable in contract to the company and not liable to the plaintiff in
tort Lord Denning rejected the 19th Century fallacy. In his view "it is a well
established   rule   that   if A   is   liable   to   B   into C in tort on the same facts."
The tort of negligence (Tort of Negligence is a legal wrong that is suffered by
someone at the hands of another who fails to take proper care to avoid what a
reasonable person would regard as a foreseeable risk ) according to Lord Denning is
an entirely separate cause of action ( is a set of facts sufficient to justify a right to
sue to obtain money, property, or the enforcement of a right against another
party), so it is irrelevant that another cause of action exists as regards to other
persons.

NOTE:           

Lord Denning’s Judgment is a dissenting Judgment, it is not part of the Ratio of

Decidendi, and it is not binding. The ratio of decidendi of the case is the statement
of the majority, expressed by Lord Asquith, that there is no duty of care in
negligence as for negligent misstatement . This ratio was later overruled by the
House of Lords in Hedley Byrne v. Heller.

LORD ASQUITH'S TREATMENT OF THE HOUSE OF LORDS' DECISION IN

DONOGHUE V. STEVENSON:

He rejected Lord Atkin's "Neighbor’s Principle" on the ground that it was not
accepted by other judges of the majority. He does not think that Lord Macmillan
agreed with Atkin's broad principle when he said that “the categories of negligence
are never closed". Since he finds that the ration of Donoghue v. Stevenson (which is
a House of Lords decision binding on the Court of Appeal) is restricted to
manufacturers’ liability, he finds that did not overrule earlier Court of Appeal
decisions in Lelivre v. Gould. This statement of Donoghue v. Stevenson is significant
especially in assessing the present status of Lord Atkins Neighbor principle.

Postscript:
Lord Asquith and Lord Cohen delivered a majority judgment which was based on
the distinction between economic loss and physical injury. Lord Asquith referred to
the decision in Derry v. Peek and maintained that the case of Donoghue v.
Stevenson was not intended parenthetically or sub silentio to sweep away such a
sub-stratum. Nor did Donoghue v. Stevenson reverse or qualify the principle laid
down in Lelivre v. Gould:

In the present state of our law different rules seem to apply to negligent
misstatements, on the one hand, and to the negligent circulation or repair of
chattels on the other, and Donoghue vs Stevenson does not seem to have abolished
those differences.

Lord Asquith was read ready to be called a “Timorous (nervousness or a lack of

confidence) soul” as opposed to “bold spirit” Compare the competing values: while
Lord Denning would want to extend the application of the rule in Donoghue v.
Stevenson to all situations, Lord Asquith on the other hand, is content limiting
himself to existing notions, maintaining that Donoghue v. Stevenson was yet another
instance (a category) in the development of notions for liability where there is no
contract.

Important:   Below are questions to guide you in reading the case of Candler v.
Crane Christmas Co.

1. Was there more than one ground or reason for the decision?
2. What is a precedent sub-silentio? (When a case is decided against precedent)

3. Does the "neighbor" principle cover all cases of harm caused by negligence?

4. Was the Court of Appeal bound to follow the ratio of Le Lievre v. Gould's
case?
 5. In what circumstances did Lord Denning consider a duty of care in respect of
negligent statement arose?

6. Does Lord Asquith distinguish Donoghue v. Stevenson on the ground that:

a) It was a case of manufacturer's liability.

b) It was a case of a negligent act or omission (but not a statement).

c) It was a case of physical damage or all the above reasons or some.

7. Does Lord Asquith accept that a case can be an authority for a proposition
which is not expressly stated in the case ? What does he say of Perry v. Peek,
of a sub silentio in Donoghue v.   Stevenson? Is he consistent?

A CASE OF NEGLIGENT STATEMENTS LEADING TO PHYSICAL INJURY AND NOT

ECONOMIC LOSS.

The problem before the court was to determine which of the then existing
authorities on negligent statements was to guide.  Also the court had to consider
whether Donoghue v. Stevenson was an appropriate authority.

CLAYTON V. WOODMAN [1962] 2 QB 533 [HC & CA decisions]

MATERIAL FACTS were that the plaintiff, a bricklayer was employed by the first
defendants, a firm of builders who had contracted with the second defendants, a
regional hospital board to install a lift and motor room in one of their hospitals. The
contract required that the work should be done with directions of an architect, third
defendants. To install a lift it was necessary to demolish part of the building. On the
instruction of the architect the plaintiff embarked in the installation in the process of
which he was injured and brought this action against the defendants.
ISSUE: Whether the defendants were liable and on the basis of which authority? 
[Arguments by Counsels are in a way scattered. So it is advised that they will be
presented as we analyze the judgment as a whole].

HOLDING: The HC held D1 and D3 liable (which was reversed by the Court of
Appeal on grounds other than those by Salmond J).

Judgment of Salmond J:

1. The use of the term ratios

He distinguished Derry v. Peek, Lelivre v. Gould. Candler v. Crane Christmas (all

decisions of the Court of Appeal and binding on him) on the ground that there, the
damage was financial not physical i.e. the fact that the damage in those cases was
financial was material. This fact was not mentioned in Derry v. Peek in that case- it
was impliedly treated as material. The fact was not mentioned in Le Lievre v. Gould.
In that case there is nothing to suggest that the judges thought the results would
have been different had the negligent misstatement resulted in physical harm.

Salmond J. in fact employs the definition of ratio called the rule of induction.

2. Salmond's distinction:

He admitted that Asquith LJ in Candler v. Crane Christmas, excluded all cases of

negligence’s from liability. One can say he has to accept the authority of Candlers
case as it is a Court of Appeal case, and cannot deny that at least some negligent
misstatements are not actionable. His distinct on between negligent misstatements
that cause financial loss, not physical damage, he admits to be 'illogical' (pp. 542-
546].
Note:   Salmond J made the following important statements in the course of his
judgment:

1. It was suggested that the fall was triggered off by the action of the plaintiff
himself, but even if this be so (and) an for from being satisfied that it is), it
seems to me to be immaterial [ p. 538].

1. In my view, the first defendants have no defence to this action. It was their
duty as the plaintiff's 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 highly
dangerous operation unless the gable were supported by cutting or shoring,
but they allowed this work to be carried out without any such shutting or
shoring. In my judgement, the first defendants were clearly negligent in that
they did not shore or shut this wall when they knew that the chase was about
to be cut in it. This negligence was the cause.of the accident. [Liability is
based on duty of care (owner invitee) and strict liability (statutory) [p.538-
539)).

1. I am quite unable to find that the second defendants in any way failed in
their duty of care to their invitees [po 540). Types of mistakes which can be
performed by a Professional:
2. 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 realized the extreme danger of
cutting the chase without shoring or shutting the gable [p.541).

3. I reach the conclusion that since neither Lelievre v. Gould nor Candler v. Crane
Christmas was concerned with a careless statement causing physical damage,
they cannot exclude the application of the principle enunciated in Donoghue
v. Stevenson to the particular facts of the case [po 546).

 (What are the implications of this statement to future judges?)

1. Although the dicta of Asquith LJ must carry the greatest weight, I do not
consider that the decision in Candler v. Crane Christmas excluded careless
statements from the ambit of Donoghue v. Stevenson. It may difficult to think
of the logical reasons why there should be, in some circumstances, a duty to
take care in making statements causing physical damage but never such a
duty in making statements .causing only financial loss. Logic and commons
sense, are uncertain guides in this branch of the law [p. 545]

Questions:

(1)  Does Salmond J. find that the fact that the architect gave the instructions direct
to the  bricklayer, was material? You find in the judgment?

(2)        The following is a quotation from Millner Negligence in Modern Law
(Butterworth 1967 p. 32) . *0n   the   other   hand,    failure   to   take   positive
precautions  against  a  peril  which was  not   (even remotely) of your own making
nor proceeding from property which is under your control or was so at the relevant
time is not generally regarded as negligence. The law does not exact altruistic
behaviour,   it does not  reguire you  to  love  your neighbour,   but only that you
shall not  inure your neighbour [the words of Lord Atikins in Donoghue v. Stevenson
[1932]   A.C.   562   though   referring   to   *acts   and omissions'    clearly  
excludes   form   the   neighbour principle precisely such acts of pure altruism.

(1)  What hypothetical examples does Salmond give of this altruistic behaviour'?

(2)  Consider the liability in negligence of the doctor in the following circumstances,
under the English law of negligence:-

(a)         Bw. Juma is driving along Morogoro Road one night and is involved in a
serious collision with another vehicle. His car ends up on the wrong side of the road,
the driver's door flies open and Bw. Juma is deposited, unconscious and bleeding on
road. Dr. Mshenzi, driving to town, sees the accident and Bw. Juma lying on the
road, but decides that after a hard day's work he is in real need,  a Tusker,  decides
to ignore the accident. He drives round the unconscious man and the wrecked car,
and proceeds to the Ulevi Bar to quench his thirst.

(b)         Dr. Ndugu, driving along a few minutes later, though tired after a bUsy day
stops his car and goes to the aid of Bw. Juma. He attends to Bw. Juma's injuries, and
seeing that he has lost a lot of blood decides to give him a transfusion. He has in
his car, by lucky chance, a bottle of blood, of the COlfullon (blood group, 0 positive).
He has no means of testing what Bw. Juma's blood group is. It is, however, obvious
that if Bw. Juma does not get blood soon, he will die. Dr. Ndugu takes a chance, and
administers the blood, Bw. Juma dies a few minutes later. When he is taken to the
mortuary later it is discovered that he was wearing a medallion round his neck
beneath his clothing which said IIWarning, I have a rare blood group: Group A
negative. In an emergence contact Ocean Road Hospital Tel. 52361 at once. Bw.
Juma died directly as a result of his being given the wrong blood group.

(3) Do you think that the rule as to altruistic behaviour is appropriate in an African
country aspiring for socialism?

4 .3 (c)        A case of innocent but negligent misrepresentation which caused

economic loss and the court's assessment of circumstances under which the loser
can get damages.

 HEDLEY BYRNE & CO LTD V. HELLER & PARTNERS LTD. [ 1963]2 ALL ER 575 at 578-
618

Material Facts: The appellants were a firm advertising agents. The respondents were
mere bankers. The appellants case against the respondent; that having placed on
behalf of a client X on c] terms substantial orders for advertising time or Television
programmes and for advertising spao certain newspapers on terms under which the
appeal became personally liable to the TV and news] companies, they inquired
through their own banker respondent) as to the credit worthiness of X who wer
customers of the respondent. They were given bj respondents satisfactory
references. In those repl respondents clearly stated that such information given on
the understanding that "it was for private and without responsibility on the part of
the bank o officials" (disclaimer from liability). Therefore turned out not to be
justified, and it was plaintiff's claim that reliance on such refer resulted into loss. The
appellants were seeking to recover the incurred financial loss from the respondent
on the ground that the replies were given negligent and in breach of the
respondent’s duty to exercise care in giving the]
In the High Court, McNair J gave Judgment in favour of 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.

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 extend the sphere of
special relationship beyond that of contract and fiduciary relationship.

The judgement of McNair J was affirmed by the Court of Appeal on the basis of
authority binding on the Court of Appeal and that there was no sufficient close
relationship between these parties to give rise to any duty. The case was before .the
House of Lords and the Law Lords who heard the appeal were Lord Reid, Lord
Morris of Borth-Y-Gest (read by Lord Hodson), Lord Hodson, Lord Devlin) (read by
Lord Pearce) and Lord Pearce.

Issue: Whether the respondents were liable?

Arguments by the appellants:

The argument was based on the decision of Donoghue v. stevenson on the notion
of proxiillity.

Argument by the respondent was that they owed the appellants no duty of care and
in any case they had given their replies with a disclaimer of liability.

Holding: Appeal was dismissed (case decided in favour of the respondents) .

Ratio Decidendi: When a mere inquiry is made by one banker of another, who
stands in no special relationship to him, then, to be careful can be inferred, ... there
is no duty excepting the duty of common honesty ....

Obiter Dicta:

If, in the ordinary course of business or  information or advise from another, who is
not under contractual or fiduciary obligation to give information or advise, in
circumstances in which a reasonable man so asked would know that he was being
trusted, or that his skill or judgment was being relied on, and the information or
advise without clearly so qualifying his answer as to show that he does  not accept
responsibility, then the person replying accepts a legal duty to exercise such care as
the circumstances require in making his reply; and for a failure to exercise that care
action for negligence will lie if damage

In this case the Law Lords drew a distinction between liability likely to arise when
there is a contract between the effect of a disclaimer when a person gives advise to
another with whom he has no contract. The Law Lords emphasize the banker will
not at any point release information to any other person that will prejudice his
client.

Let us now examine what comes out of the speeches of the Law Lords:

(a) Lord Reid responding on the authority of Donoghue v. Stevenson, acknowledged

the importance of that decision but maintained that, that decision was not intended
to 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 set 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 influenced by them; and they often do that without taking
care which they would take business connection (p. 580).  Another obvious
difference is that a negligently made article will only cause one accident, 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 (pp. 580-581).

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 (p. 581 Emphasis Supplied).

Then to judge proceeded to examine what the authorities had to say:

The most natural requirement would be that expressly or by implication from the
circumstances the speaker or writer has undertaken some responsibility.... It must
now be taken that Perry v.   Peek did not establish any universal rule that in the
absence of contract an innocent but negligent misrepresentation cannot give rise to
an action. But as it is shown in this House in Nocton v. Lord Ashburton, that it is too
much widely stated: "To found an action for damages there must be a contract and
breach and fraud" (Perry v. Peek). We cannot therefore accept as accurate the
numerous statements to that effect in cases between 1889 and 1914 and we now
determine the extent of the exceptions to that rule. Cases in which besides that
obligation arising from honesty the breach may give rise to damages:
-cases where a person within whose special province it lay to know a particular fault
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,

- "constructive fraud"

-"breach of special duty" (pp. 581-582)

(b) Lord Morris of Barthoy-Gest had the following to say:

Quite apart 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 doctor
may unexpectedly come across an unconscious man, who is a complete stranger to
him, and who is in urgent need of skilled attention: If the medical man, following the
fine tradition of his profession, proceeds to treat the unconscious man he must
exercise reasonable skill care in doing so (p.589).

In the case of a banker the judge said:

If someone who was not a customer of a bank made a formal approach to the bank
with a definite request that the bank would give him deliberate advise as to certain
financial matters of a nature with which the bank ordinarily dealt with the bank
would be under no obligation to accede to the request: if however they undertook,
though gratuitously, to give deliberate advise they would be under a duty to
exercise reasonable care in doing it (p. 589).

There can be no negligence unless there is a duty but           duty may arise in
many ways:

There may be duties owed to the World at large: alterum non lacdere. There may be
duties arising from contract. There may be duties arising from a relationship without
the intervention of contract in the ordinary sense of the term, such as duties of a
trustee to his cestui que trust or of a guardian to his ward (p. 593).

On someone who possesses special skill:

 My Lords I consider that it follows and that it should not 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  on 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 on his judgement or skill or on his ability to
make  careful   inquiry,   a person takes it on himself to give information or advise 
to,   or  allow  his   information   or advise to, or allow his information or advise to
be passed on to, another person who, as he knows or should know will place
reliance on it, then a duty of care will arise (p. 594)

(c)     Lord Hodson had the following to say:

I shall 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
sufficiently It is impossible to catalogue the special features which must exist for a
duty of care to arise:
I do not think that 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.... I agree ...
if in a sphere where a person is not placed that others could reasonably rely on his
judgment or skill or his ability to make careful inquiry such person takes it on
himself to give information or advice to, or allows his information or advise to be
passed on to, another person who, as he knows, or should know, will place reliance
on it, then a duty of care will arise (p. 601) .

On How English Law Has Developed:

(d)       Lord Devlin on the authority of Donoahue v. Stevenson had the following to
say:

 I come next to Donoghue v. Stevenson. In his celebrated speech in that case Lord
Atkin did two things.    He stated what he described as a general conception and
from that conception he formulated a specific proposition of law. In between he
gave a warning "against the danger of stating propositions of law in wider terms
than is necessary, lest essential factors be omitted in a wider survey and the inherent
adaptability of English law be unduly restricted".

What Lord Atkin called "a general conception of relations giving rise to a duty of
care" is now often referred to as the principle o~ f1proximity". You must take
reasonable care to avoid acts or omissions which you can reasonably foresee would
be like to injure your neighbour. ln the eyes of the law your neighbour is a person
who is so closely and directly affected by your act that you ought reasonably to
have him in contemplating as being so affected when you are directing your mind
to the acts or omissions which are called in question (p. 607).
Then he proceeded to show what it meant for the following courts; and in particular
to the case under consideration:

Now it is in my opinion a sensible application of what Lord Atkin was saying for a
judge to be invited on the facts of a particular case to say whether or not there was
"proximity" between the plaintiff and the defendant. That would be a misuse of a
general conception and it is not the way in which English law develops. What Lord
Atkin did was to use his general conception to open up a category of cases giving
rise to a special duty. It was already clear that the law recognized the existence of
such a duty in the category of articles that were dangerous in themselves. What
Donoghue v. Stevenson did may be described either as the widening of an old
category or as the creating of a new and similar one. The general conception can be
used to produce other categories in the same way. An existing category grows as
instances of its application multiply, until the time comes when the cell divides ( p. 
607).

He went on to show the value of Donoghue v. Stevenson to Hedlev B. v. Heller:

The real value of Donoghue v. Stevenson to the argument in  this   case   is   that  
it   shows   how  the   law   can   be developed to solve particular problems. Is the
relationship between the parties in this case such that it can be brought within a
category giving rise to a special duty? As always in English law the first step in such
an inquiry is to see how far the authorities have gone,   for new categories  in the 
law do not spring  in existence over-night.   It would be surprising if the sort of
problem that is created by the facts of this case had never until recently arisen in
English, law.   As a problem it is a byproduct of the doctrine of consideration.    If
the respondents   had   made   a   nominal   charge   for   the reference,   the
problem would not exist.  If it were possible in English law to construct a contract
without consideration, the   problem would move at once out of the first and
general phase into the particular;   and the question would be, not whether on the
facts of the case there was special relationship, but whether on the facts of the case
there was a contract. . A promise   given   without   consideration   to   perform   a
service cannot be enforced as a contract by the promisee, but   if   the   service  
is   in   fact   performed   and   done negligently, the promisee can recover in an
action in tort (p.  608).

 Distinction is drawn between words and Act or Omissions

(e )     Lord Pearce had the following to say: After quoting a passage by Lord
Chancellor Viscount Haldane in Nocton v. Lord Asburton he stated inter alia:

The law of negligence has been deliberately limited in its range by the Courts'
insistence that there can be no actionable negligence in vacuo without existence of
some duty to the plaintiff.

Negligence in word creates problems difference from those of negligence in act.

Words are more violable than deeds. They travel fast and far a field. They are used
without being expended and take effect in combination with innumerable facts and
other words. Yet they are dangerous and can cause vast financial damage [cites
Grant v. Australia Knitting Mills] then went on to say:

If the mere hearing or reading of words were held to create proximity, there might
be no limit to the person to whom the speaker or writer could be liable. Damage by
negligent acts to persons or property on the other hand is more visible and obvious,
its limits are more easily defined and it is with this damage that the earlier cases
were more concerned.
(Then the judge examines the development of the law on liability on the basis of
words starting with the case of Pasley v. Freeman (1789) which laid down a duty of
honesty in words to the world at large - this creating a remedy designed to protect
the economic as opposed to the physical interests of the community. The extension
was made in Derry v. Peek - a duty to use reasonable care in the preparation of the
document called a valuation. But the ratio decidendi of Derry v. Peek is said to have
been wrongly applied in Le Lievre v. Gould as explained by Lord Denning LJ. in
Candler v. Crane Christmas and in
Nocton v. Lord Ashburton, it was said that the authority of DVP had been too much
emphasized.

 Commenting on the Decision of the House of Lords in Donoghue v. Stevenson Lord

Pearce said:

The range of negligence in act was greatly extended in Donogue v. Stevenson on

the wide principle of the good neighbour - sic utere tuo alienuum non laedas. How
far economic loss alone without some physical or material to support it, can afford a
cause of negligence by act? The House of Lords in Donoghue v. Stevenson was, in
fact, dealing with negligent acts causing physical damage and the opinions cannot
be read as if they were dealing with negligence in word causing economic damage.
That case can no more help in this sphere than by affording some analogy from the
broad outlook which it imposed on the law relating to physical negligence (pp. 613-
615) .

Important: Below are questions to guide you in reading the case of Hedley Byrne &
Co. Ltd. v. Heller & Partners Ltd:
1.          Is the decision reached on the basis of Donoghue v. Stevenson or another
principle, e.g a special
              relationship?  

2.         Are all the parts of the jUdgement 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?

6.         You have read the judgment in each of which the conclusion was that the
defendant was not liable to the plaintiff. What difference in reasoning in the
judgments can you detect?

8.         Why do you think their Lordships went to such length in elaborating their
opinions when they agree that the presence of the disclaimer of responsibility
avoided ability?