The Assumption of Responsibility in Hedley Byrne
The speeches in Hedley Byrne recognise that a duty can arise in giving information or advice, but offer two different explanations as to the basis of that duty: first, that it is a voluntarily assumed obligation and, secondly, that it is simply a maniÂfestation of the neighbourhood principle underlying all duties of care recognised by the law of negligence.
The appellant advertising agents extended credit to a customer in reliance on a favourable reference given by the respondent bankÂers. The reference was obtained through the appellant's own bankers, and was given gratuitously and ‘without responsibility' on the part of the respondents. The House of Lords unanimously held that a duty of care could in certain cirÂcumstances be owed with respect to the giving of information or advice, but was not owed in the circumstances of the case.[257] It is sometimes said that, apart from the disclaimer, a majority would have held the bank liable,[258] but this is clearly incorrect.[259] Lord Hodson considered that no duty would have arisen even in the absence of the disclaimer[260] and Lord Morris said there was much to be said for that view.[261] Lord Reid regarded this as an ‘unusually difficult' question, which he did not answer.[262] Lord Devlin also left the question open. He considered that a banker giving a reference could owe a duty, but it would be necessary to consider whether the reference was intended to be passed on to the customer, a question he did not resolve here.[263] Lord Pearce may have been willing to recognise a duty in the absence of the disclaimer, but did not express a clear view.[264]Ambivalence as to whether the obligation in question is assumed or imposed is evident in the reasons given by Lord Morris and Lord Hodson for considering that a duty of care would not have arisen, even in the absence of a disclaimer.
Without deciding the matter, Lord Morris said there was much to be said for the view that a banker giving a brief reference in relation to credit worthiness ‘ does not accept, and there is not expected from him, any higher duty than that of givÂing an honest answer’. [265] Lord Hodson agreed with the observation of Pearson LJ in the Court of Appeal that ‘ it would not be reasonable to impose on a banker the obligation suggested’. That was because it would be ‘ wholly unreasonable’ to expect a banker to take the time and trouble to search records, study documents and produce ‘a well-balanced and well-rounded report’.[266] It would, Lord Hodson conÂcluded, be ‘unreasonable to impose’ on persons such as bankers who are asked to give references a burden greater than that of giving an honest answer.[267]Of course the speeches in Hedley Byrne were focused primarily on the questions of whether and when a duty of care might arise in relation to the giving of inforÂmation or advice. Lord Reid observed that a person who is asked for information or advice and knows that his skill and judgement is being relied upon has three courses open to him: stay silent, answer with a disclaimer, or simply answer without qualification.
If he chooses to adopt the last course he must, I think, be held to have accepted some responsibility for his answer being given carefully, or to have accepted a relationship with the inquirer which requires him to exercise such care as the circumstances require.[268]
According to Lord Reid, therefore, a person who chooses to give information or advice in relevant circumstances without a disclaimer of responsibility must be held either to have accepted responsibility ‘for his answer being given carefully’ or to have a ccepted a relationship with the inquirer which requires him to exercise care. Nevertheless, for Lord Reid, the crucial question in determining whether a duty of care is owed in making a statement of fact or opinion is whether ‘ expressly or by implication from the circumstances the speaker or writer has undertaken some responsibility’.[269] He later said that ‘ in this case the question is whether an undertaking to assume a duty to take care can be inferred’.[270] Lord Reid considered that the appeal must be dismissed because the respondents did not do so.[271]
Lord Morris held that ‘if A assumes a responsibility to B to tender him deliberate advice, there could be liability if the advice is negligently given’.[272] Interestingly, he used the word ‘could’ because ‘the ordinary courtesies and exchanges of life would become impossible if it were sought to attach legal obligation to every kindly and friendly act’.[273] The effect of the principle is that a professional such as an accountant, solicitor or doctor engaged for reward to give advice can be liable for damages if the advice is given negligently.
But, Lord Morris said, the same principle may apply without a contract or formal engagement. He said that a doctor who proceeds to treat an unconscious stranger in an emergency is bound to exercise ‘all the professional skill he possessed, or professed to possess’.[274] The relevant principle is that a duty of care will arise where a person who possesses special skill undertakes to apply that skill for the assistance of another person, who relies on it. More particularly, in relation to the giving of information or advice:[I]f 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.[275]
Lord Hodson agreed with that statement of principle, and noted that in this case the ‘appellants depend on the existence of a duty said to be assumed by or imposed on the respondents when they gave a reference’. [276] That Lord Hodson saw liability for negligent misstatement as a manifestation of proximity can clearly be seen in the passage in which he equated physical injury arising from an incorrect label on a bottle ‘and a negligent compounding of ingredients which leads to the same result’.[277] The fact that proximity is more difficult to establish in the case of words than other actions is, he said, a matter of proof rather than principle.[278] Most tellÂingly, as noted above, Lord Hodson expressed the view that, even in the absence of a disclaimer, persons such as bankers giving credit references owe no duty of care because it would not be reasonable to impose such a burden on them.[279]
Lord Devlin observed that he did not understand any of their Lordships in the case to hold that it is a responsibility imposed by law.[280] Rather, he said, ‘ It is a responsibility that is voluntarily accepted or undertaken’ either where a general relationship such as solicitor and client is created, or in relation to a particular transaction.[281] In the latter case, responsibility attaches to an act ‘only if the doing of that act implied a voluntary undertaking to assume responsibility’.
[282] He did, however, go on to say that he regarded this proposition as ‘ an application of the general conception of proximity’, [283] which he had earlier defined as the principle that one owes a duty to take care to avoid acts or omissions foreseeably likely to injure a person who ‘is so closely and directly affected by your act that you ought reasonably to have him in contemplation as being so affected when you are directing your mind to the acts or omissions which are called in question’.[284]Lord Pearce’s speech also vacillated between treating the obligation in question as assumed and treating it as imposed, though his analysis strongly favoured the latter position. Lord Pearce cited cases in which it was recognised that duties of care might be owed by: a gratuitous bailee with special skill,[285] a surgeon employed by someone other than the patient[286] and a person who gratuitously undertook to effect insurance on account of another.[287] Lord Pearce observed that the principle recognised in these cases is that ‘if persons holding themselves out in a calling or situation or profession take on a task within that calling or situation or profession, they have a duty of skill and care’.[288] This principle applies equally to act and word and to physical and economic loss,[289] and can be explained on the basis that such persons are ‘in particularly close proximity to those who, as they know, are relying on their skill and care although the proximity is not contractual’.[290]
Lord Pearce considered that the ambit of the duty of care in negligence ‘depends ultimately upon the courts’ assessment of the demands of society for protection from the carelessness of others’.[291] The crucial question here was whether there was ‘such a special relationship in the present case as to impose on the defendÂants a duty of care to the plaintiffs’ and the answer to that question depends on the circumstances of the transaction, including ‘the gravity of the inquiry and the importance and influence attached to the answer’.[292] ‘ To import such a duty the representation must normally, I think, concern a business or professional transÂaction whose nature makes clear the gravity of the inquiry and the importance and influence attached to the answer’.[293] Lord Pearce did observe that in the case of a casual social inquiry, ‘no such special relationship or duty of care would be assumed’[294] and where, as here, both parties say expressly that there shall be no liability, that ‘I do not find it possible to say that a liability was assumed".[295]
In summary, while ambivalence on the issue ran through all of the speeches, Lord Reid and Lord Devlin leaned towards the idea that the obligation in quesÂtion was assumed.
By contrast, Lord Morris, Lord Hodson and Lord Pearce leaned towards the idea that the obligation in question was imposed on the basis of the interactions between the parties and was not founded simply on an express or implied undertaking.II.