Before a negligence action can be brought, it must first be shown that the defendant owes the claimant a duty of care. The law of tort has developed to include a number of different but overlapping tests as to whether and when a duty exists, which the courts have sought to reconcile.

The principles

“You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour…[namely]…persons who are so closely and directly affected by my act that I ought reasonably to have them in contemplation…” Donoghue v Stevenson.

  • To establish a claim in negligence, it must be shown that a duty of care was owed by the defendant to the claimant, and that breach of that duty has caused loss/damage.
  • The law recognises a number of different but overlapping tests for establishing a duty of care. The three key tests are:
    • The three-stage Caparo v Dickman test, which comprises:
      • Foreseeability - is this kind of damage foreseeable?
      • Proximity - Notional duty to class (neighbour principle), and
      • is it fair, just and reasonable to impose duty?
    • Assumption of responsibility: A person who assumes responsibility to another to perform a service must then do so with reasonable skill and care. Whether responsibility has been assumed will be determined objectively, on the facts. Certain “special relationships” will give rise to a duty, such as principal and agent, or professional advisor and client. Even services provided free of charge to friends by a professional may be caught; see our article here on the architect’s negligence case of Lejonvarn v Burgess.
    • The incremental approach: in new or unfamiliar contexts, a duty might be established by analogy with previous decisions (Murphy v Brentwood District Council).
  • Where there is a contract or retainer in place (such as for provision of professional services) this will generally determine the scope of the duty. Whether or not a professional has agreed to give advice or only information (known as the SAAMCo distinction) may be a consideration. In "information" cases, the court will only hold a party liable for losses which result from the information being incorrect. A recording of our client call considering the issues raised by the decision in BPE Solicitors v Hughes-Holland can be heard here; the court applied SAAMCo principles to a solicitors’ negligence case.

In the courts

  • In CGL Group Ltd & Ors v Royal Bank of Scotland plc & Ors it was held that banks carrying out a review under an agreement with the Financial Conduct Authority into how interest rate hedging products had been sold to certain customers were not under a duty to those customers to conduct the reviews with reasonable care and skill.
  • In analysing whether or not it was appropriate to impose a duty, the Court of Appeal followed the line taken in previous authorities, emphasising that the tests for establishing a duty are complementary and are not to be considered in isolation from each other. As the three tests usually lead to the same answer, they can (and should) be used as cross checks on one another. The court will look at the detailed circumstances of the particular case and the particular relationship between the parties in the context of their legal and factual situation as a whole. Beatson LJ in CGL observed that the three tests should be used as practical guides rather than applied too rigidly, and that it is “necessary carefully to analyse the various factors relevant to ascertaining whether a duty exists under all the tests”
  • The SAAMCo distinction and the decision in BPE v Hughes Holland were considered in the architect’s negligence case of Riva Properties Ltd and others v Foster + Partners Ltd (see our article on that decision here). The court applied the Caparo v Dickman test, considering that to be the “principal modern statement of the approach necessary when considering the question of whether a duty of care is owed by one party to another"; and found that no duty of care was owed by the architects to companies controlled by the first claimant, who was the architects’ client. There was no relationship of neighbourhood or proximity, nor would imposition of a duty be fair, just and reasonable.

What this means

  • Reconciling the three tests, and choosing which to apply in different situations, has not always been entirely straightforward. Fraser J made very clear in the Riva decision that the three-stage Caparo test was his preferred starting point. As made clear in CGL, however, the various tests are intended as guidance, and should ultimately achieve the same aim.
  • In looking to compensate a party the court will always take a flexible and pragmatic approach, looking at the circumstances of the particular case. Whichever test is applied, where a sufficient relationship exists and one party has suffered loss as the result of the acts or omissions of the other, the law will respond.

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