Liability for References: Spring v Guardian Assurance
| Author | Thomas Allen |
| DOI | http://doi.org/10.1111/j.1468-2230.1994.tb01925.x |
| Date | 01 January 1994 |
| Published date | 01 January 1994 |
January
19941
Liability
for References
unacknowledged. Paternalism triumphs, and it is the paternalism of an unelected,
unrepresentative group who use but fail to openly acknowledge that power.
Liability
for References:
Spring
v
Guardian Assurance
Thomas
Allen
*
If A suffers economic harm as a result of a statement communicated by
B
to C,
A
might consider bringing an action against
B
in
defamation. But can A bring an
action in negligent misstatement against B? A generous reading of
Donoghue
v
Stevenson
suggests that A could do so, but recent cases on pure economic loss
suggest that a modern court would be reluctant to allow an action
in
negligent
misstatement. Recently, in
Spring
v
Guardian Assurance,’
the Court
of
Appeal
continued the modern trend and unanimously decided that a referee does not owe a
duty of care to the subject of the reference for economic harm resulting from
inaccuracies in the reference. Unfortunately, the judgment of the Court, delivered
by Glidewell
W,
does not fully explore the relevant duty of care issues, especially
those regarding policy and the public interest.
The Facts, the Decision and the Issues
The plaintiff had been a representative for Guardian Royal Exchange Assurance
(GRE), an insurance company. GRE dismissed him when it discovered he was
planning to join a competitor. The plaintiff then applied to become a representative
of Scottish Amicable, another insurance company. Both Scottish Amicable and
GRE were members
of
the Life Assurance and Unit Trust Regulatory Organisation
(LAUTRO). Under LAUTRO’s Code of Conduct, Scottish Amicable was required
to request a reference from GRE before the plaintiff could be appointed. The Code
of Conduct also required GRE to provide the reference requested by Scottish
Amicable. The reference stated that the plaintiff was ‘a man of little or no integrity
and could not be regarded as honest.’ It also stated that he ignored the concept of
‘best advice’ and sold policies which would bring him the highest commissions. As
put by Judge Lever
QC
at trial, the reference was ‘so strikingly bad as to amount to
.
.
. “the
kiss
of death” to his career in insurance.’* Upon receiving the
reference, Scottish Amicable refused to appoint the plaintiff, as did several other
insurance companies to which he subsequently applied. There was some dispute
over the accuracy of the reference, but Judge Lever found that the plaintiff had
only been guilty of inexperience and incompetence, and not dishonesty or a lack of
integrity.
The plaintiff sued GRE, primarily to recover the earnings
he
claimed were lost
as a result of the mistaken allegations of dishonesty and a lack of integrity. The
action was framed in malicious falsehood, breach of contract and negligent
*University
of
Newcastle upon Tyne.
The author would like to thank Bruce Anderson
for
his valuable comments
on
earlier drafts.
1
2 119921
IRLR
173, 177.
119931
2
All
ER
273, 119931
IRLR
122.
0
The
Modern
Law
Review
Limited
1994
111
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