Hedley Byrne & Co Ltd v Heller & Partners Ltd

Hedley Byrne v Heller
Court House of Lords
Decided 28 May 1963
Citation(s) [1964] AC 465, [1963] 2 All ER 575, [1963] 3 WLR 101, [1963] UKHL 4
Court membership
Judge(s) sitting Lord Reid, Lord Morris of Borth-Y-Gest, Lord Hodson, Lord Devlin and Lord Pearce
Keywords
negligent misrepresentation, assumption of responsibility

Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465 is an English tort law case on pure economic loss resulting from a negligent misstatement. Prior to the decision, the notion that a party may owe another a duty of care for statements made in reliance had been rejected,[1] with the only remedy for such losses being in contract law.[2] The House of Lords overruled the previous position, in recognising liability for pure economic loss not arising from a contractual relationship, introducing the idea of "assumption of responsibility".

Facts

Hedley Byrne were a firm of advertising agents. A customer, Easipower Ltd, put in a large order. Hedley Byrne wanted to check their financial position, and creditworthiness, and subsequently asked their bank, National Provincial Bank, to get a report from Easipower’s bank, Heller & Partners Ltd., who replied in a letter that was headed,

"without responsibility on the part of this bank"

It said that Easipower was,

"considered good for its ordinary business engagements".

The letter was sent for free. Easipower went into liquidation, and Hedley Byrne lost £17,000 on contracts. Hedley Byrne sued Heller & Partners for negligence, claiming that the information was given negligently and was misleading. Heller & Partners argued there was no duty of care owed regarding the statements, and, in any case, liability was excluded.

Judgment

The court found that the relationship between the parties was "sufficiently proximate" as to create a duty of care. It was reasonable for them to have known that the information that they had given would likely have been relied upon for entering into a contract of some sort. That would give rise, the court said, to a "special relationship", in which the defendant would have to take sufficient care in giving advice to avoid negligence liability. However, on the facts, the disclaimer was found to be sufficient enough to discharge any duty created by Heller's actions. There were no orders for damages. Lord Morris of Borth-Y-Gest,[3]

I consider that it follows and that it should now be regarded as settled that if someone possessing special skill undertakes, quite irrespective of contract, to apply that skill for the assistance of another person who relies upon such skill, a duty of care will arise. The fact that the service is to be given by means of or by the instrumentality of words can make no difference. Furthermore, if in a sphere in which a person is so placed that others could reasonably rely upon his judgment or his skill or upon his ability to make careful inquiry, a person takes it upon himself to give information or advice to, or allows his information or advice to be passed on to, another person who, as he knows or should know, will place reliance upon it, then a duty of care will arise.

...in my judgment, the bank in the present case, by the words which they employed, effectively disclaimed any assumption of a duty of care. They stated that they only responded to the inquiry on the basis that their reply was without responsibility. If the inquirers chose to receive and act upon the reply they cannot disregard the definite terms upon which it was given. They cannot accept a reply given with a stipulation and then reject the stipulation. Furthermore, within accepted principles... the words employed were apt to exclude any liability for negligence.

Effectively, the House of Lords had chosen to approve the dissenting judgment of Denning LJ in Candler v Crane, Christmas & Co [1951] 2 KB 164.

Subsequent developments

In later years there has been a steady trend towards regarding the law of negligence as depending on principle so that, when a new point emerges, one should ask not whether it is covered by authority but whether recognised principles apply to it. Donoghue v Stevenson [1932] AC 562 may be regarded as a milestone, and the well-known passage in Lord Atkin's speech should I think be regarded as a statement of principle. It is not to be treated as if it were a statutory definition. It will require qualification in new circumstances. But I think that the time has come when we can and should say that it ought to apply unless there is some justification or valid explanation for its exclusion. For example, causing economic loss is a different matter: for one thing it is often caused by deliberate action. Competition involves traders being entitled to damage their rivals' interests by promoting their own, and there is a long chapter of the law determining in what circumstances owners of land can and in what circumstances they may not use their proprietary rights so as to injure their neighbours. But where negligence is involved the tendency has been to apply principles analogous to those stated by Lord Atkin (cf. Hedley Byrne v. Heller [1964] A.C. 465).

See also

References

  1. See Candler v Crane, Christmas & Co [1951] 2 KB 164
  2. Elliott, Quinn, p. 25
  3. at pp. 502-4

Bibliography

External links

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