Chapter 11 The Tort of Negligence - OED-update - Oxford University ...

Chapter 11 The Tort of Negligence 355
In the following two decisions, a duty of care was owed by the defendants because they
were aware of the particular claimants, and it was reasonable to assume that the claimants
would rely on the accounts given in connection with a particular transaction and not seek
independent advice.
Morgan Crucible v Hill Samuel Bank (1991)
Facts: The defendants were the financial advisers of a company targeted for a takeover by the
claimants. During the takeover bid, the defendants made inaccurate statements about the
accounts and financial prospects of the company. The claimants increased their bid and subsequently
suffered loss on taking over the company.
Decision: The defendants were liable as they knew of the claimants’ bid, and had intended the
claimants to rely on the financial information given, and the claimants had done so. Much of
the information was only available to the defendants and could not have been obtained independently
by the claimants.
Yorkshire Enterprise Ltd v Robson Rhodes (1998)
Facts: The claimants invested £250,000 in company which went into liquidation shortly afterwards.
The claimants sued the company’s accountants, stating they had relied on negligent
misstatements in audited accounts, and in letters written by the accountants sent to the
claimants.
Decision: The defendants owed a duty of care to the claimants as they were aware that the claimants
were potential investors and of the use to which the accounts would be put. Also, in the circumstances,
it was reasonable for the claimants to rely on the information without further enquiry.
Business Insight Football club loses claim against surgeon
In October 2006 West Bromwich Albion Football Club lost their £2 million claim for financial
loss against an orthopaedic surgeon who negligently advised that one of their players, Michael
Appleton, should undergo reconstructive surgery for a knee injury. The court stated that the
doctor did not owe a duty of care to the club for financial losses incurred from losing the player
and having to replace him. Although it was reasonably foreseeable that the club would suffer
financial loss, there was not a sufficient degree of proximity (special relationship) between the
club and the doctor and it would not be fair, just, or reasonable to impose a duty.