Chattels and Certificates in the Law of Negligence
| Date | 01 April 1952 |
| Published date | 01 April 1952 |
| Author | R. G. Wilson |
| DOI | http://doi.org/10.1111/j.1468-2230.1952.tb00230.x |
CI1A'l"l'ELS
AND CERTIpICArl'ES
IN
TI-IE
LAW
OF
NEGLIGENCE
IT
has often been pointed out that the implications of the
tWQ
great House of Lords cases in
our
modcrn law of tort are conflicting,
and that when an English court is faced with facts which fall
within the area
of
their contact,
it
will find great difficulty in
coming to a decision which squares with them both. Such was the
position of the Court of Appeal in
Candler
v.
Crane, Christmas
L?
Co.'
last year. The "Neighbour
')
doctrine of Lord Atkin,
supported as it was by the majority in the House of Lords in
Donoghue
v.
Stevenson,?
can and has been taken as justification.
for
extending the range of liability in negligence,
so
that it has at
last been invoked
to
support an action by a plaintiff who suffered
financial loss through
a
public accountant's negligent misstatement,
On the other hand, there is implicit in the language of the Lords
of Appeal in
Derry
v.
Peek3
the proposition that misstatement
lies properly in the realm of deceit and that persons who rely upon
statements in business transactions should be protected from dis-
honesty but not
from
mere carelessness. One might repeat the
words of Professor Paton: "After all, why should we trcat the
implication of
Dery
v.
Peek
with greater reverence than the
implication
of
Donoghrte
v.
Stevenson
)'?
It
is difficult to see
in what way the earlier case is of greater authority than the later,
especially in view of section
8
of the Directors Liability Act,
1800,
(now substantially re-enacted in section
48
of the Companies Act,
l048),
which imposes liability on persons issuing a company pros-
pectus in which false statcments are made and reasonable care is
not shown. The ground of the actual decision in
Derry
v.
Peelc3
is thus removed. However, the arguments
for
and against the
relegation of
Dery
v.
Peek
to the position of leading case on the
internal content and not on the external range of a deceit action
are lucidly and comprehensively laid out in such recent valuable
articles as those of Professor Pat~n,~ Mr. Justice Fullagar 'of the
High Court of Australia,' and Dr.
W.
L.
Morison,' and indeed in
the judgments of the Court of Appeal in
Candler
v.
Crane, Christmas
Q
Co.'
itself.
It
is proposed here to carry the discussion one stage farther,
and, assuming that the need for some limited principle of liability
1
[1951] 2
X.B.
164.
a
[lo321
A.C.
562.
3
(1888)
14
A.C.
337.
4
(1951) 25
Austr.L.J.
292.
5
"
Liability in Tort
for
Negligent Miestatements,"
(1947) 25
Can.B.R.
123.
6
"
Liability for Representations at Common Law,"
(1951) 25
Austr.L.J.
278-
7
"
Liability in Negligenco for False Statements,"
(1951) 67
L.Q.R.
212.
160
hrnm
1952
CHATTELS, ETC., IN THE LAW
OF
NEGLIGENCE
161
is admitted, to suggest the types of limitation that could be placed
upon that liability, the practical problems that would arise from
their application, and some difficulties of theoretical classification
in a general scheme of tortious liability which would result.
It
will be assumed that
it
is open to the House of Lords to admit such
a limited principle as that suggested by Denning
L.J.,
in
Candler's
Case,0
and that there is a social need for the protection of pcrsons
in the position of the plaintiffs in such cases as
De
La
Uere
V.
Pearson,O Le Lievre
v.
Gotild,lo
Cann
v.
I.Villson,ll Candler's Case
and some of the American and Commonwealth cases. Professor
Seavey has recently made an eloquent plea for this.12 In the dis-
cussion that followed the decision by the Ncw York Court of Appeals
against
liability in
Ultramares Corporation
v.
Touche,13
one
American professional journal
l'*
actually urged the revcrsal of the
decision, arguing that it is the claim of the accounting profession
that its prepared statements be relied upon, and that it does not
lie in its mouth to deny the duty of care it
so
insistently claims
to
perform.
It
is also an inference
from
the many attempts to
attain the same result by different roads. Decisions which in their
result support a principle of liability for negligent misstatement
by professional men and public officials have been explained as
going on implied agency15 or third party benefit.
Glanzer
V.
Shepard
l6
is sometimes treated as going on the latter principle and
the principles of the two types
of
liability are analogous, though
not co-terminous. In any event, such a loop-hole is not available
in this country, unless Denning
L.J.'s
remarks in
Smith
v.
River
Douglas Catchment
Board
I'
represent a possible development of
English law on this subject. In American jurisdictions the defini-
tion of fraud is wide enough to cover many cases which in England
*
[1951] 2
K.B.
164,
at
pp.
179
ct
seq.
9
[1908] 1
ILB.
280.
10
[1893]
1
Q.B.
491.
11
(1888) 39
Ch.D.
39.
12
"
Candler
v,.,
Crane, Chistinos
rE
Co.
:
Negligcnt Misreprescntation by
Accountants
(1951) 67 L.Q.R. 466.
And
cf.
Fullogar
J.
op.
cit.
282
:
"
One
must,
I
think, feel most rcluctant to believe that under
a
developcd systcm
of
law,
a
person in the position
of
the plaintiff in
Cann
v.
Willson
had no redress."
A
note in
65
Harvard
L.R.
356
indicatcs that
Candler's
Case
would
haw
gone
tho other way, at any ratc in New York.
l3
(1931) 255
N.Y.
170
(sec
pp.
175-76,
infra).
Id
Tlre
Certified
Public
Aqyuntant,
Vol.
10, 228
(American). Compare
(1981)
65
Harvard
L.R.
356:
Imposition
of
this extensive duty of carc could
also
bc justified by thc fact that third persons arc virtually forced to rely on the
representations
of
an accountant, because
of
the dificulty
of
checking the work
independent]
.
Moreover, tho accountant's fce could properly reflcct the severe
risk
to whicE he would thus bo subjected, since it is the client
who
benefits
directly from thc wide circulation
that
can bc given to an unqualified rcport."
i5
Thus
Humphrys
V.
Pratt
(1831) 5
Bli.
(N.s.)
154
(wherc the House
of
Lords held
for
a
sheriff
who
had lost damages in an action in trespass for taking
A's
goods
whcn
13,
against
whom
a
p.
fa.
writ had been obtained and delivered to thc
sheriff, falscl reprcscntcd they were
13'8
own)
was
explained on this ground
by Tindal C.%
.
in
Collins
v.
Ecans
(1844) 5
Q.B.
820.
10
(1922) 233
N.Y.
263
(see p.
173,
infro).
17
[1949] 2
R.B.
500,
at
pp.
514
et
seq.
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