Introduction

This chapter will investigate whether the law regarding negligent misstatements causative of purely financial loss¹ should be treated as something different and apart from accepted tort doctrines, with particular attention being paid to devel­opments in English law.

The phrase ‘assumption of responsibility’ featured in Hedley Byrne & Co Ltd v Heller & Partners Ltd² and was prominent in the decision of the House of Lords in Williams v Natural Life Health Foods Ltd.³ However, it will be argued that it was invoked, in the latter case, as a mere device for the protection of small com­pany directors and to reinforce rules of separate legal personality. The invocation of ‘ assumption of responsibility’ as an independent test for duty is contrary to both its usage in the Hedley Byrne case and observations in Customs and Excise Commissioners v Barclays Bank plc⁴ about the similarities between proximity and

¹ The chapter will explore what are termed ‘orthodox’ misstatement cases. For discussion of ‘extended Hedley Byrne’ cases, see C Witting, Liability for Negligent Misstatements (Oxford, Oxford UniversityPress, 2004) ch 11.

² Hedley Byrne & Co Ltd v Heller & Partners Ltd [1964] AC 465.

³ Williams v Natural Life Health Foods Ltd [1998] 1 WLR 830.

⁴ Customs and Excise Commissioners v Barclays Bank plc [2007] 1AC181. the ‘objective' version of the assumption of responsibility test, such that the former encompasses the latter.

The chapter assumes that the law of negligence is a unified whole and that a common set of elements can be employed to determine cases regardless of the type of loss caused. Claims for negligent misstatements causative of financial loss are properly determined by the application of the accepted elements of negligence, particularly those of proximity, causation and remoteness. Policy also plays a part in determining misstatement cases because financial interests are not highly val­ued in the law of torts^[1108] and because of the potential for a wide vista of liability arising from the indirect means by which harm arises.

The focus of discussion in this chapter will be upon the use of proximity-based reasoning in the case law and literature.^[1109] It builds upon the writer's previous work to provide an account of those proximity factors that are relevant to misstate­ment cases, proximity being asserted to subsist in the ‘pathways to harm' that arise between the parties prior to a negligent interaction. Furthermore, the chapter identifies several factors that have been wrongly treated as examples of proximity and explains why they should be treated as secondary reasons for recognising duties of care.

The direction of travel in this chapter is away from more outlandish concep­tions of misstatement liability towards a more realistic conception. However, this is not to say that the chapter's conclusions simply reflect the current English law. The chapter is testament to the continuing problems experienced in determining the duty of care in misstatement cases and presents an argument for the resolution of those problems. Thus, although it would be a mistake to treat misstatement lia­bility as different and apart from the tort of negligence, what we should be doing in debating the law within the pages of this book is to fine-tune our understanding of the duty of care as a part of a broader study of negligence.

II.