Writing in the Australian Law Journal in 1964,7 DM Gordon,8 began by observÂing that the decision ‘presents more than one drastic break with tradition' and concluded that it reflected the growing ‘Americanisation of English law'.9
A paper on Hedley Byrne by Tony Honore was one of the highlights of a joint conference between the Society of the Public Teachers of Law and the Australasian Law Schools Association in Sydney in August 1965.10 He was more cautious and concluded that ‘we should not delude ourselves that Hedley Byrne has the reach and potentiality of Donoghue v Stevenson.
Fifty years ago there were many fewer Australian law journals but the decision was variously welcomed,11 it was downplayed,12 and it was predicted that it would lead to more business for insurance companies.13All five of the Law Lords, Lord Reid, Lord Morris, Lord Hodson, Lord Devlin and Lord Pearce delivered full speeches in Hedley Byrne. Although Lord Reid had sat since 1948, the other Law Lords were from a new generation14 and it is interestÂing to speculate what the outcome might have been before the original panel.15 The leading speech, given by Lord Reid, stressed the fact that the damage arose as a result of words rather than deeds.16 Lord Hodson17 and Lord Devlin18 also recogÂnised that, as things stood, statements fell outside the scope of negligence. Another distinction, the one between economic loss and physical injury, began to emerge in the early twentieth century.19 There was never a complete bar on recovery
7 ‘Hedley Byrne v Heller in the House of Lords' (1964) 38 Australian Law Journal 39, 79.
8 Gordon was a Canadian barrister who has been described as ‘a pioneer of Canadian administraÂtive law scholarship': K Roach, ‘The Administrative Law Scholarship of DM Gordon' (1989) 34 McGill Law Journal 1,2.
9 Gordon (n 7) 88.
10 AM Honore, ‘Hedley Byrne & Co Ltd v Heller & Partners Ltd' (1964-1965) 8 Journal of Society of Public Teachers of Law NS 284.
For an account of thisjoint conference see, F Cownie, A Great and Noble Occupation: the History of the Society of Legal Scholars (Oxford, Hart Publishing, 2009) 113.11 TM Clarke, ‘Hedley Byrne and Company v Heller and Partners Limited' (1964-1967) 2 University of Tasmania Law Review 85.
12 D Payne, ‘Hedley Byrne & Co Ltd v Heller & Partners Ltd' (1963-1964) 6 University of Western Australia Law Review 467, 501.
13 JM Fitzgerald, ‘Liability in Negligence for Statements. Hedley Byrne & Co Ltd v Heller and Partners Ltd' (1965-1967) 5 Sydney Law Review 162.
14 Lord Hodson and Lord Morris were appointed in 1960, Lord Devlin in 1961, and Lord Pearce in 1962.
15 The original panel consisted of Lord Radcliffe, Lord Cohen, Lord MacDermott, Lord Jenkins and Lord Guest. The hearing had to be abandoned after a day in order that Lord Radcliffe could preside over a public inquiry. For the story, see L Blom-Cooper and G Drewry, ‘Towards a System of AdminisÂtrative Law: The Reid and Wilberforce Era, 1945-82' in L Blom-Cooper, B Dickson and G Drewry, The Judicial House of Lords 1876-2009 (Oxford, Oxford University Press, 2009) 209, 214. Gerald Gardiner QC, counsel for the appellant, is said to have persuaded the Lord Chancellor, Lord Dilhorne, to include more common law judges on the new panel.
16 Hedley Byrne (n 2) 482-83. Lord Pearce also placed weight on this issue: see Hedley Byrne (n 2) 534. This reflected earlier dicta from Lord Haldane in Nocton v Lord Ashburton [1914] AC 932 (HL) 948.
17 Hedley Byrne (n 2) 506.
18 ibid 528.
19 J Gordley, ‘The Rule Against Recovery in Negligence for Pure Economic Loss: an Historical Accident?' in M Bussani and VV Palmer (eds), Pure Economic Loss in Europe (Cambridge, Cambridge University Press, 2003) 25, 47-50. Some of the leading cases cited against recovery for pure economic loss such as Cattle v The Stockton Waterworks Co (1875) LR 10 QB 453 (QB) and Simpson & Co v Thomson [ 1877] 3 AC 279 (HL) were decided on other grounds.
for pure economic loss.[69] Despite the fact that in Hedley Byrne itself the nature of the loss was either overlooked,[70] was seen as unimportant[71] or as presenting no obstacle,[72] the fact that it was a claim for pure economic loss would later be regarded as significant.[73]
All of the Law Lords accepted that this was not the occasion for a straightÂforward application of Donoghue v Stevenson.[74] Lord Devlin proposed imposing a duty of care when there was a ‘ relationship equivalent' to contract, which was described as ‘ circumstances in which, but for the absence of consideration, there would be a contract'.[75] In an important passage he elaborated further: ‘Where, as in the present case, what is relied on is a particular relationship created ad hoc, it will be necessary to examine the particular facts to see whether there is an express or implied undertaking of responsibility'.[76]
The phrase ‘assumption of responsibility' was a consistent part of Lord Devlin's reasoning.[77] Lord Morris used the same terms,[78] but he also stressed reasonable reliance,[79] and ran the two ideas together.[80] Lord Hodson expressed agreement with him, but appeared to endorse a reasonable reliance test.[81] Lord Reid can also be seen to combine elements of ‘ assumption of responsibility' and ‘reliance'.[82] Lord Pearce offered no substantive comment on this point. Lord Devlin said ‘ in so far as your Lordships describe the circumstances in which an implication will ordinarily be drawn, I am prepared to adopt any one of your Lordships' statements'. [83] He presumably saw no difference in the tests—a point which is undermined by the fact that he was the only Law Lord who unequivocally thought[84] that, were it not for the ‘without responsibility' clause, the respondents would have been liable.[85]
I.