Hedley byrne co ltd v heller and partners ltd 1964

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Hedley Byrne & Co Ltd v Heller and Partners Ltd (1964) (First case that says DOC for PEL) FACTS: Plaintiffs were advertising agents who would pay for advertisements and then bill their clients to be reimbursed. Ezypower wanted some ads so P wanted to check that they had they funds. They got their bank to contact EP’s bank. On two occasions they said it was fine: 1) over phone without responsibility; 2) In writing with reference BUT at the bottom of the page it said ‘without responsibility’. P’s relied on references and entered into the contract. EP couldn’t P so P lost money. P sued the bank who said there was no DOC. HELD: No DOC BUT: Obiter: In some cases there will be a DOC to take care when making statements – Candler is wrong . Lord Reid: To establish DOC, need to show a special relationship between P and D: 1. Speaker knew or ought to have known that the inquirer was relying on the speaker to exercise such care as the circumstances required ; and 2. It was reasonable for the inquirer to rely on the statement; and 3. The inquirer did rely on the statement and it caused damage. ELEMENTS
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Requirement of Special Skill NB: Barwick and Gibbs dissent is regaining vitality to better protect plaintiffs ( Tepco Pty Ltd 2001) Parties Other Than Immediate Recipients - Unresolved: law in Australia in unsatisfactory. 11 MLC v Evitt (AU)(1971) (Says Hedley Byrne is correct) (Privy Council – overruled trial case) FACTS: Evitt lent money to HG Palmer. They wanted to know whether to continue the investment and lend more money. They asked MLC (a co-subsidiary) for financial advice regarding the investment. MLC said the investment was sound knowing why he was asking and that he would rely on it . There was no disclaimer, so Evitt invested more. Palmer went bust. Evitt sued MLC. MLC said no DOC because they weren’t in the business of giving advice . HELD: No DOC. Majority said Hedley Byrne is correct and on the facts there is a DOC. Shaddocks & Associates Pty Ltd v Parramatta City Council (1981) FACTS: P entered into K to buy land but wanted to check the land first. The solicitor checked if there were any plans to widen the road by calling the Council and speaking to an unidentified person who said there were no proposals. The Council followed this up in writing with a certificate. Usually if there was a proposal they would write YES and if there wasn’t they would leave it blank. The certificate was blank so they bought land and everything turned bad. P sued the Council. HELD : DOC Public body – function is to give information. Gibbs: dissent: special skill not needed provided it is a serious business occasion or professional transaction. Obiter: MLC still authority. Use of disclaimers is not conclusive that there will be a DOC but may go towards likelihood of reliance. (However is it OK to assume that a party will still rely despite the disclaimer) Past identical conduct had induced reliance.
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- Major issue = indeterminate liability = ‘indeterminate amount, for an indeterminate time, to an indeterminate class’ – Per Cardozo CJ
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