Tort question – negligent misstatement in the Tort of negligence

Henry (C) has rights against Gordon (D) as far as C relied upon D as a professional, and D knew that C would rely on his expertise, as set out in Hedley Byrne v Heller (1964); whereby C was an advertising agency who had asked another firm; Easipower Ltd to buy advertising space on their behalf. The bank of Easipower; Heller said twice that they were respectable, but this was said with a disclaimer. The advertising agency then proceeded with a contract with Easipower. Easipower subsequently collapsed, and went into liquidation, which as a result left Hedley Byrne to pay for the advertising space.

The House of Lords held that no duty of care was owed, due to there being no proximity. Also the disclaimer used prevented liability. The 5th limb of Hedley Byrne; the reasonably foreseeability test; 'did D voluntarily assume responsibility to give advice or information? ' Which is best demonstrated where D undertakes some professional task, in the knowledge that it is really c who is really paying for it (albeit indirectly) and C will suffer if it is done poorly. This would only apply in a business context, such as in the case between Henry and Gordon; they had a 'special relationship'.

Lord Reid stated that a 'special relationship' arose when 'it is plain that the party seeking information or advice was trusting the other to exercise such a degree of care as the circumstances required, where it was reasonable for him to do that, and where the other gave the information or advice when he knew or ought to have known that the enquirer was relying on him'. By giving the advice he is deemed to have accepted responsibility for exercising the degree of care which was required in the circumstances. Gordon had some skill and experience in that relevant area. It was not given in a social or informal occasion.

But in the same case of Mutual Life and citizens Assurance Co v Evatt, lord Reid said conversely that as he was a business man that was sufficient. Although Gordon was not in the business of giving advice e. g. he was not a surveyor, or solicitor, he was however giving advice as a tool in his self promotion of his goods, and he was a business man; a professional. He gave his personal assurances in a business setting, although it was free and for the same purpose as it was used almost; to sell his home improvement products- it was given in a business context that his advice was given.

Such as in Capparo v Dickman, whereby Lord Bridge said that; 'the D giving advice or information was fully aware of the nature of the transaction which the C had in contemplation, knew that the advice or information would be communicated to him directly or indirectly and knew that it was very likely that the C would rely on that advice or information in deciding whether or not to engage in the transaction in contemplation'. Which is relevant to this case as far as he gave the information with the intention of selling that exact boiler; the ''' to him himself.

Which if Henry had brought through Gordon would have cost him even more when he re-sold it. Gordon does owe a duty of care, to Henry. Henry's economic loss has arisen from a negligent misstatement, which is recoverable, such as in Smith v Eric S. Bush, whereby C sought a loan on a mortgage to enable her to buy a house. D surveyed the house on behalf of the mortgage company, failing to notice a fundamental structural defect.

As Bush must have known was likely, Smith gained access to the survey and relied on it instead of having one done independently. After C moved in, it became apparent that the surveyor had been negligent. Also it does not state that Gordon had used a disclaimer. And the information had been put in the public eye; D had set himself out as a professional. D has breached his duty of care owed to C as far as he has fallen bellow the standard of care which the duty of care has dictated to be owed.

He would have been expected as the 'reasonable man', (as in Blyth v Birmingham Watership) to have to as C was a prospective customer to give reliable advice. This standard deemed appropriate to D; a professional is judged according to the standards of a competent body of professional opinion (Bolam v Friern Hospital) But it could be argued that as anyone could be considered a 'prospective customer', the floodgates argument could be used (pace Cardozo CJ in Ultramares v Touche).

However as a business man, with experience and expertise in the field, he could have foreseen that by providing inadequate information could, in particular the use of boiler, which can if fitted incorrectly can emit poisonous carbon monoxide gas, would lead to situation of harm arising, or at least some loss to that customer, like with Henry. (foreseeability in Roe v Minister of Health).

Also as C was lacking specialist skills as in Wells v Cooper, extra consideration should have been taken into account. D is liable for damage as far as 'but for' his actions C would not have suffered loss. (Barnett v Chelsea Hospital). But for D advising C to buy that particular boiler, C wouldn't have done so; D is a contributing cause to C's loss. Although C chose to take and accept that information, although in the context of D being a professional in that field.

It could however be viewed that as C did not use the information wholly as it was intended; to buy a boiler from D, that it wasn't in context. He brought the advised boiler from a different supplier, who if he'd asked could have advised him differently. Although it was reasonably foreseeable that C may take that advice and then go to buy the boiler from a different supplier. The precise consequences of his negligent act did not however have to be foreseen for the damage to be held (Hughes v Lord Advocate).

But the re-sale at a loss was C's choice, although as he would not have brought it otherwise and therefore had to have sell it, D did influence this, but the re-sale difference is a too far remote consequence of D's advice; it was not within his reasonable contemplation. In conclusion henry would be able to claim damages for negligent misstatement, as the purpose for the information issued by D was clear; for C's circumstances he should buy the 'Cal Combi Boiler' as it would work better for him. But he would not be able to claim for the re-sale, no duty of care was owed for the new transaction of the boiler; too remote.