The Gazette 1961 - 64

tion, no amendment of the pleadings was necessary, and he awarded the plaintiff £465 IDS. damages. The defendants appealed. Willmer, L.J., said that the general allegation in the pleadings had to be considered in the general context of the plaintiff's pleaded case, which was totally different from the judge's findings. His lordship could not agree with the judge's view that an amendment of the pleadings was not necessary or that, notwithstanding the departure from the plaintiff's pleaded case, the defendants were not caused substantial embarrassment. The general principle as to pleadings stated in the opening paragraph of Lord Radcliffe's judgment in Esso Petroleum Co., Ltd. v. Southport Corporation (1956) A.C. 218, at p. 241, applied, although his lordship did not say that there might not be cases where a plaintiff whose own story had been disbelieved could recover damages on the defendants' story. His lordship would allow the appeal. Danckwerts and Diplock, L.JJ., delivered con curring judgments. Appeal allowed. (Kerr v. James Bridge Copper Works, Ltd. Solicitors' Journal, July izth, 1963, page 552.) The decision of the English Court of Appeal in Hedley Byrne & Co. Ltd. v. Heller & Partners Ltd. (reported in the GAZETTE for October/November, 1961 at page 50) has been affirmed by the House of Lords. In this case the appellants who were advertising agents wanted to place certain forward advertising orders on behalf of a certain firm, E Ltd. The terms were that the appellants would be primarily liable for the cost thereof and before doing so they instructed their own bankers to enquire from the respondents, Heller & Partners, who were bankers for E Ltd. for references as to the firm's financial position. Two enquiries were made one by telephone and a subsequent enquiry in a letter which was replied to. In each case the reference was given by the respondents " without responsibility " on their part. It was clear at the trial that the respondents should not have given the reference which they did as they should have known well that E Ltd. had financial commitments amounting to £50,000 in the form of an overdraft with them but neither the Court of Appeal nor the House of Lords addressed itself to the issue of negligence. Relying on the references given, the appellants placed orders totalling £22,000. E Ltd. subsequently went into liquidation and the appellants were able to recover only a small part of their loss. It was held by the Court of Appeal (upholding the trial judge) that (i) there was no general duty imposed on the respondents to take care when

answering queries and (2) the fact of respondents financing the firm created a special relationship between the respondents and the subject of their reference but this was not sufficient to create a duty to take care in giving the reference. The House of Lords in dismissing the appeal held that in this particular case, but for the respondents' disclaimer, the circumstances might have given rise to a duty of care on their part, yet their disclaimer of respon sibility for their replies on the occasion of the first enquiry was adequate to exclude the assumption by them of a legal duty of care, with the consequence that they were not liable for any negligence. It would appear, therefore, that if in the ordinary course of business or professional affairs a person seeks information or advice from another who is not under contractual or fiduciary obligation to give the information or advice, in circumstances in which a reasonable man so asked would know that he was being trusted, or that his skill or judgment was relied on, and the person asked chooses to give the information or advice without clearly so qualifying his answer as to show that he does not accept responsibility, then that person accepts a legal duty to exercise care and will be liable for negligence if damage results. (1963 A11E.R. 575.) As this statement was not necessary for the actual decision it appears to be an obiter dictum, but it is nonetheless important for solicitors and other who give testaments or character references or give general advice. Note.— In giving this decision the House of Lords disapproved of the judgment of the Court of Appeal in the leading case of Candler v. Crane, Christmas & Co. (1951 i All E.R. 426) which had been applied by the Court of Appeal in giving judgment in the present case. It was held by the Court of Appeal in Candler v. Crane, Christmas & Co. that in the absence of contractual or fiduciary relationship between the parties the defendants owed no duty to the defendants to exercise care in preparing a set of accounts upon which the plaintiff had had relied and that the plaintiff could not therefore maintain against them an action for negligence. The House of Lords in this present case held that the fact that the person receiving the information was likely to act in reliance on it (i.e., the circumstances were that a reasonable man would be expected to know that his skill and judgment were being relied upon) would be sufficient to create liability in negligence. In this particular case it was only the respondents specific disclaimer of responsibility which had saved them.