Lord Oliver introduced another 4 additional tests under the Caparo’s case.

Fifth test: Advice required for a purpose.

LAW

According to Lord Oliver, the initial added test is that the advice attained from the advisor by the
advisee intended for a specifically stipulated or described purpose at the time the advice is given.

Application

For the first issue, by applying the fifth test, the advice given by Prudent Financial Times which is
stock prices to Dashing will be used by the Board to evaluate where they are supposed to invest
with their savings. With that advice, Dashing decided to invest in a company called Te Amo
Poultry Sdn Bhd. Even though, the advice was given for the purpose to show the performance of
stock prices for some companies, but Prudent had already stated that these figures are subject to
changes and shall not be used for business acquisition purposes.

For the second issue, Dashing Co Ltd could claim against private auditor as the initial purpose of
the report is to inform on the financial sounding of Kuzin Flour Mills Ltd. They had a special
relationship as the report was duly made for the use of Dashing Co Ltd. This can be justified as
the report was given to Dashing Co Ltd for the purpose to know the financial position of Kuzin
Flour Mills Ltd and it led to Dashing investing into Kuzin Flour Mills Ltd but ended up with a
huge loss.
The Sixth Test: Advice is communicated to the advisee.

The next test is the advisor is cognizant that his advice will be corresponded to the advisee for
them to use that advice for specified or describe purpose.

Application of the Sixth Test:

To apply the sixth test for the first issue, Prudent Financial Times was not aware that their stock
news report will be used by Dashing Co Ltd to acquire Te Amo Poultry Co as they had already
included a disclamation remark communicating that “These figures are subject to changes and
correction and should not be used for business acquisition purposes.” This remark made by Prudent
Financial Times was to ensure that no businesses are using their figures as they were not meant to
use for business acquisition purposes and are subject to changes. However, Dashing made use of
the information and decided to acquire Te Amo, even though it has already been refuted on the
same page of the stock news that it should not be used for business acquisition purposes.

For the second issue, the private auditor is fully aware of the advice as the auditor has handed the
report to Dashing Co Ltd. The auditor knows the advice is communicated and used by Dashing for
the purpose of acquiring Kuzin Flour Mills Ltd. This led to Dashing having to sell of Kuzin and
suffer a significant loss.

The Seventh Test: Defendant know plaintiff will solely rely upon the advice given.

The seventh test that was devised under Caparo’s is, the advice given will be acted upon by the
advisee without other independent inquiry.

Application of the Seventh Test:

In the first issue, Prudent did not know that Dashing will solely rely on their advice for stock prices
as they have already made a disclaimer stating that those figures shall not be used for business
purposes. It was already remarked by Prudent thus, Dashing does not have the right to claim against
Prudent.
For the second issue, the private auditor knows that Dashing will rely solely upon his advice as the
Board has already employed the auditor to do a background check on Kuzin. This can be justified
by the action of Dashing acquiring Kuzin after they have seen the auditor’s report on Kuzin.
Dashing also did not seek any other advice or independent acquire as they had already relied solely
upon the private auditor.

The Eight Test: Acted upon by the advisee to his detriment.

The last test is the advice is acted upon by the advisee to his detriment.

Application of the Eight Test:

The justification of the Eight test can be seen when Dashing indeed acted upon the advice given
by making a successful takeover bid based on the information given by Prudent, to its detriment
of severe losses as Te Amo has been losing value for months. However, that detriment was due to
Dashing’s own fault as it has stated, those stock figures are not meant to be used for business
acquisition purposes and Dashing have no special relationship with Prudent.

Under the second issue, by applying this last test, it is emblematic that Dashing acted upon the
information given by the private auditor and later suffered severe financial losses when Kuzin went
into bankruptcy. This proves that the auditor is liable as other tests had rebutted as the auditor has
a special relationship and a duty of care towards Dashing.