Mutual Life and Citizens' Assurance Company Ltd v Evatt
| Jurisdiction | UK Non-devolved |
| Judgment Date | 1970 |
| Date | 1970 |
| Court | Privy Council |
Negligence - Duty of care to whom? - Careless misrepresentation - Gratuitous information and advice - Insurance company giving inquirer information and advice as to financial affairs of associated company - Inquirer investing money - Loss of investments - Whether duty of care owed to inquirer - Whether inquirer having cause of action.
The plaintiff, who was a policy holder in the defendant insurance company, brought an action against that company claiming damages for the negligence of the company in giving gratuitous information and advice on the financial stability of an associated company with the knowledge that the plaintiff would act on that advice and invest in the associated company; that he had invested therein and that he had incurred a financial loss. He also claimed that the company was in a better position than himself for obtaining full information concerning the associated company's financial affairs and that the company's officers were capable of forming a reliable judgment upon that information. The defendant company entered a demurrer that the facts alleged did not disclose a cause of action. The demurrer was dismissed by the Supreme Court of New South Wales and the decision was upheld by a majority of the High Court of Australia.
On appeal to the Judicial Committee: —
Held, allowing the appeal (Lord Reid and Lord Morris of Borth-y-Gest dissenting), that, since the company's business did not include giving advice on investments and it did not claim to have the necessary skill and competence to give such advice and to exercise the necessary diligence to give reliable advice, its duty towards the plaintiff was merely the duty to give him an honest answer to his inquiry and, accordingly, the facts alleged did not disclose a cause of action (post, p. 35A–B).
The following cases are referred to in the judgments:
Anderson (W. B.) & Sons Ltd. v. Rhodes (Liverpool) Ltd. [
Candler v. Crane, Christmas & Co. [
Cann v. Willson (
Derry v. Peek (
Dorset Yacht Co. Ltd. v. Home Office [
Fish v. Kelly (
Hedley Byrne & Co. Ltd. v. Heller & Partners Ltd. [
Le Lievre v. Gould [
Low v. Bouverie [
Nocton v. Lord Ashburton [
Parsons v. Barclay & Co. Ltd. and Goddard (
Shiells v. Blackburne (
Woods v. Martins Bank Ltd. [
The following additional cases were cited in argument:
Banbury v. Bank of Montreal [
Barnes v. Commonwealth of Australia (
Benoy Krishna Mukherjee v. Satish Chandra Giri (
Bourhill v. Young [
Burton v. Karbowsky (
Caledonian Collieries Ltd. v. Speirs (
Dartnell v. Howard (
De La Bere v. Pearson Ltd. [
Dodds and Dodds v. Millman (
Donoghue v. Stevenson [
Goad v. Canadian Imperial Bank of Commerce (
Heskell v. Continental Express Ltd. [
Hopkins v. Butts (
Ibrahim v. The King [
Lanphier v. Phipos (
Lubrano v. Gollin & Co. (
Mercantile Credit Co. Ltd. v. Hamblin [
Ministry of Housing and Local Government v. Sharp [
Robinson v. National Bank of Scotland Ltd.,
Rose v. Hvric (
Sharp v. Avery and Kenwood [
Taylor v. Ashton (
Vacher & Sons Ltd. v. London Society of Compositors [
Wilkinson v. Coverdale (
Windsor Motors Ltd. v. District of Powell River (
APPEAL (No. 36 of 1969) from a judgment and order (November 11, 1968) of the High Court of Australia (Barwick C.J. and Kitto and Menzies JJ., Taylor and Owen JJ. dissenting) dismissing the appeal of the defendants, Mutual Life and Citizens' Assurance Co. Ltd., and M.L.C. Ltd., from the judgment of the Court of Appeal of the Supreme Court of New South Wales (Wallace P. and Walsh J.A., Asprey J.A. dissenting) dismissing the demurrer entered by the defendants that the declaration of the plaintiff, Clive Raleigh Evatt, disclosed no cause of action.
The relevant facts are stated in the majority judgment delivered by Lord Diplock.
A. B. Kerrigan Q.C., T. R. Morling Q.C. and T. Simos (all of New South Wales bar) for the defendants.
K. R. Handley, D. M. J. Bennett (both of New South Wales bar) and Alastair Sharp (of the English bar) for the plaintiff.
November 16. The majority judgment of their Lordships was delivered by LORD DIPLOCK.
The appellants are defendants to an action brought against them in the Supreme Court of New South Wales by the respondent, Mr. Evatt, claiming damages for negligent information and advice given to him gratuitously by the appellants. New South Wales still preserves the system of pleading current in England 100 years ago between the passing of the
Special leave was granted because, as has been common ground at the hearing before their Lordships and in the courts below, what is really at issue between the parties upon the demurrer does not depend upon the procedural niceties of the system of pleading followed in New South Wales but upon a question of substantive law of outstanding importance in the development of that branch of the law of tort which was expounded in the speeches in the House of Lords in Hedley Byrne & Co. Ltd. v. Heller & Partners Ltd. [
In each of the courts in which the demurrer has been heard attention has been confined to the first count in which Mr. Evatt sues the first appellant (hereinafter called “the company”) alone. Their Lordships do not think that it would be helpful to set out this count ipsissima verba. It was amended during the hearing in the Supreme Court of New South Wales by inserting an additional phrase in the middle of the count which resulted, as a matter of grammar, in an unintended alteration in the meaning of a subsequent phrase. In the High Court of Australia, which has no jurisdiction to allow amendment of the declaration, counsel for Mr. Evatt was very sensibly permitted to put an oral gloss upon some of the actual words and phrases appearing in the declaration so as to enable the court to rule upon the actual question of substantive law which was in issue between the parties rather than that the matter should go off upon the technicalities of pre-Judicature Act pleading. This might not have been permissible at the time of the third edition of Bullen & Leake, but 100 years have passed since then; and their Lordships have followed the example of the High Court in interpreting the first count of the declaration in the light of the explanations given orally by counsel in the High Court, and have themselves accepted further explanation of its intended meaning where this has appeared to them to be necessary in order to isolate and define the point of substantive law which the parties wish to have determined.
In the light of these explanations the facts relied upon by Mr. Evatt as constituting his cause of action against the company may be stated as follows:
(1) Mr. Evatt was a policy holder in the company.
(2) He was seeking from the company information and advice concerning the financial stability of another company, H. G. Palmer (Consolidated) Ltd. (herein called “Palmer”) and as to the safety of investments in Palmer.
(3) The company and Palmer were subsidiary companies of M.L.C. Ltd.
(4) By virtue of that association the company had better facilities than Mr. Evatt for obtaining full, complete and up-to-date information concerning the financial affairs of Palmer, though at the time of the inquiry by Mr. Evatt it...
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