Spring v Guardian Assurance Plc

JurisdictionEngland & Wales
Judgment Date10 December 1992
Date10 December 1992
CourtCourt of Appeal (Civil Division)
[COURT OF APPEAL] SPRING v. GUARDIAN ASSURANCE PLC. And Others 1992 Oct. 27, 28, 29, 30; Dec. 10 Glidewell and Rose L.JJ. and Sir Christopher Slade

Negligence - Duty of care to whom? - Former company representative - Character reference - Reference supplied to third party under regulatory organisation rules - Reference resulting in loss of position by former company representative - Whether company liable to former representative for negligent reference

The plaintiff, who was an appointed company representative of the first defendants for the purpose of selling their investment products, was dismissed from the position of sales director (designate) and office manager by the second and third defendants who had been taken over by the first defendants, a subsidiary company of the fourth defendants. The plaintiff then sought to sell the products of another company. Under the rules of the regulatory body Lautro that company were required to seek, and the first defendants to supply, a reference for the plaintiff. In consequence of the unfavourable reference supplied the company refused to appoint the plaintiff as a company representative. In an action for damages the judge found for the plaintiff on negligence, holding that the defendants were under a duty of care to him and that the reference given constituted a negligent mis-statement, but dismissed claims for malicious falsehood and breach of contract.

On appeal by the defendants and cross-appeal by the plaintiff: —

Held, (1) allowing the appeal, that the giver of a reference owed no duty of care in negligence to the subject of the reference, his duty to the subject being governed by defamation and not by negligence; that if it were otherwise the defence of qualified privilege in an action for defamation where a reference was given, or the necessity for malice to be proved in an action for malicious falsehood, would be bypassed; that the defendants' obligation under the Lautro rules to “make full and frank disclosure of all relevant matters which are believed to be true” was the extent of the duty owed; and that, accordingly, the defendants did not owe the duty of care alleged by the plaintiff (post, pp. 437E–F, 438C–E).

Lawton v. B.O.C. Transhield Ltd. [1987] I.C.R. 7 overruled.

(2) Dismissing the cross-appeal, that there was no distinction between the meaning of “malice” in malicious falsehood and defamation; that the judge had found that the suppliers of the information contained in the reference had honestly believed the truth of what was said, and therefore malicious falsehood had not been made out; and that if any term as to the giving of a reference were to be implied in the plaintiff's contract with the second and third defendants, or in any contract he might have had with the first defendants, it would go no further than the obligation under the Lautro rules, with which the defendants had complied (post, pp. 430B–C, 439A–C).

Horrocks v. Lowe [1975] A.C. 135, H.L.(E.) applied.

Decision of Judge Lever Q.C. sitting as a judge of the Queen's Bench Division reversed.

The following cases are referred to in the judgment:

Addis v. Gramophone Co. Ltd. [1909] A.C. 488, H.L.(E.)

Anns v. Merton London Borough Council [1978] A.C. 728; [1977] 2 W.L.R. 1024; [1977] 2 All E.R. 492, H.L.(E.)

Bell-Booth Group Ltd. v. Attorney-General [1989] 3 N.Z.L.R. 148

Candler v. Crane, Christmas & Co. [1951] 2 K.B. 164; [1951] 1 All E.R. 426, C.A.

Caparo Industries Plc. v. Dickman [1990] 2 A.C. 605; [1990] 2 W.L.R. 358; [1990] 1 All E.R. 568, H.L.(E.)

Dorset Yacht Co. Ltd. v. Home Office [1970] A.C. 1004; [1970] 2 W.L.R. 1140; [1970] 2 All E.R. 294, H.L.(E.)

Hedley Byrne & Co. Ltd. v. Heller & Partners Ltd. [1964] A.C. 465; [1963] 3 W.L.R. 101; [1963] 2 All E.R. 575, H.L.(E.)

Horrocks v. Lowe [1975] A.C. 135; [1974] 2 W.L.R. 282; [1974] 1 All E.R. 662, H.L.(E.)

Junior Books Ltd. v. Veitchi Co. Ltd. [1983] 1 A.C. 520; [1982] 3 W.L.R. 477; [1982] 3 All E.R. 210, H.L.(Sc.)

Lawton v. B.O.C. Transhield Ltd. [1987] I.C.R. 7; [1987] 2 All E.R. 608

Liverpool City Council v. Irwin [1977] A.C. 239; [1976] 2 W.L.R. 562; [1976] 2 All E.R. 39, H.L.(E.)

Ministry of Housing and Local Government v. Sharp [1970] 2 Q.B. 223; [1970] 2 W.L.R. 802; [1970] 1 All E.R. 1009, C.A.

Moorcock, The (1889) 14 P.D. 64, C.A.

Peabody Donation Fund (Governors of) v. Sir Lindsay Parkinson & Co. Ltd. [1985] A.C. 210; [1984] 3 W.L.R. 953; [1984] 3 All E.R. 529, H.L.(E.)

Scally v. Southern Health and Social Services Board [1991] I.C.R. 771; [1992] 1 A.C. 294; [1991] 3 W.L.R. 778; [1991] 4 All E.R. 563, H.L.(N.I.)

Smith v. Eric S. Bush [1990] 1 A.C. 831; [1989] 2 W.L.R. 790; [1989] 2 All E.R. 514, H.L.(E.)

The following additional cases were cited in argument:

Balden v. Shorter [1933] Ch. 427

Barnard v. National Dock Labour Board [1953] 2 Q.B. 18; [1953] 2 W.L.R. 995; [1953] 1 All E.R. 1113, C.A.

Broadway Approvals Ltd. v. Odhams Press Ltd. (No. 2) [1965] 1 W.L.R. 805; [1965] 2 All E.R. 523, C.A.

Egger v. Chelmsford (Viscount) [1965] 1 Q.B. 248; [1964] 3 W.L.R. 714; [1964] 2 All E.R. 406, C.A.

Foaminol Laboratories Ltd. v. British Artid Plastics Ltd. [1941] 2 All E.R. 393

Guaranty Trust Co. of New York v. Hannay & Co. [1915] 2 K.B. 536, C.A.

Hornal v. Neuberger Products Ltd. [1957] 1 Q.B. 247; [1956] 3 W.L.R. 1034; [1956] 3 All E.R. 970, C.A.

Lion Laboratories Ltd. v. Evans [1985] Q.B. 526; [1984] 3 W.L.R. 539; [1984] 2 All E.R. 417, C.A.

Murphy v. Brentwood District Council [1991] 1 A.C. 398; [1990] 3 W.L.R. 414; [1990] 2 All E.R. 908, H.L.(E.)

Whiteley v. Adams (1863) 15 C.B.(N.S.) 392

The following additional cases, although not cited, were referred to in the skeleton arguments:

Adams v. Cape Industries Plc. [1990] 2 A.C. 433; [1990] 2 W.L.R. 657; [1991] 1 All E.R. 929, C.A.

Albazero, The [1977] A.C. 774; [1976] 3 W.L.R. 419; [1974] 2 All E.R. 129, H.L.(E.)

Attorney-General v. British Broadcasting Corporation [1981] A.C. 303; [1980] 3 W.L.R. 109; [1980] 3 All E.R. 161, H.L.(E.)

Bata v. Bata [1948] W.N. 366, C.A.

Bliss v. South East Thames Regional Health Authority [1987] I.C.R. 700, C.A.

British Railway Traffic and Electric Co. v. C.R.C. Co. Ltd. [1922] 2 K.B. 260

Cellactite & British Uralite Ltd. v. H. H. Robertson Co. Incorporated, The Times, 23 July 1957 Court of Appeal (Civil Division) Transcript No. 227 of 1957, C.A.

Comptoir Commercial Anversois v. Power, Son & Co. [1920] 1 K.B. 868, C.A.

Derbyshire County Council v. Times Newspapers Ltd. [1992] Q.B. 770; [1992] 3 W.L.R. 28; [1992] 3 All E.R. 65, C.A.

Greers Ltd. v. Pearman & Corder Ltd. (1922) 39 R.P.C. 406, C.A.

Hall v. Semple (1862) 3 F. & F. 337

Joyce v. Motor Surveys Ltd. [1948] Ch. 252

Leigh and Sillavan Ltd. v. Aliakmon Shipping Co. Ltd. [1986] A.C. 785; [1986] 2 W.L.R. 902; [1986] 2 All E.R. 145, H.L.(E.)

O'Laoire v. Jackel International Ltd. (No. 2) [1991] I.C.R. 718, C.A.

Riddick v. Thames Board Mills [1977] Q.B. 881; [1977] 3 W.L.R. 63; [1977] 3 All E.R. 677, C.A.

Ross v. Caunters [1980] Ch. 297; [1979] 3 W.L.R. 605; [1979] 3 All E.R. 580

Royal Baking Powder Co. v. Wright, Crossley & Co. (1900) 18 R.P.C. 95, H.L.(E.)

Salomon v. A. Salomon & Co. Ltd. [1897] A.C. 22, H.L.(E.)

Shove v. Downs Surgical Plc. [1984] I.C.R. 532; [1984] 1 All E.R. 7

Speight v. Gosnay (1891) 60 L.J.Q.B. 231, C.A.

Appeal and Cross-Appeal from Judge Lever Q.C. sitting as a judge of the Queen's Bench Division.

The plaintiff, Graham Spring, instituted proceedings against the first to fourth defendants, Guardian Assurance Plc., Corinium Holdings Ltd., Corinium Mortgage Services (Cirencester) Ltd. and Guardian Royal Exchange Assurance Plc., for damages for malicious falsehood and/or negligent mis-statement in the provision of a character reference for the plaintiff by the fourth defendants on behalf of the first defendants to Scottish Amicable Life Assurance Society Plc. The plaintiff, who had worked as a consultant for the second and third defendants, who were appointed representatives of the first defendants under the Life Assurance and Unit Trust Regulatory Organisation (“Lautro”) rules, claimed alternatively that there was to be implied in any contract between himself and any relevant defendant a term that if he became the subject of a Lautro reference the defendants would provide a reference which they had prepared with reasonable care. The judge found for the plaintiff in negligence but dismissed his claims for malicious falsehood and breach of contract.

By a notice of appeal dated 4 February 1992 the defendants appealed on the grounds, inter alia, that the judge had erred in law by holding that the defendants owed the plaintiff a duty in tort to take reasonable care in the preparation and provision to third parties of a reference concerning the plaintiff and in holding the defendants liable to the plaintiff for negligent mis-statement, whereas the judge should have found that (i) there was no such duty to take reasonable care; (ii) the law as to injury to reputation and freedom of speech was distinct from the law of negligence and that liability in respect of damaging statements was to be determined by the law of defamation and malicious falsehood and not by the application of common law duties of care.

By a notice of cross-appeal dated 21 February 1992 the plaintiff cross-appealed for an order that judgment should be entered for him against the defendants for injurious or malicious falsehood and against the second and third defendants for breach of contract on the grounds, inter alia, that (1) on the trial judge's finding of fact the plaintiff's claim for malicious falsehood should have succeeded and that the judge should have found the malice, necessary for the claim of malicious falsehood to succeed, to be present; and (2) the judge was wrong in law (a) to find that there was no contractual relationship between the plaintiff and the first defendants, and (b) not to imply a term into the plaintiff's contracts with the second and third defendants to the...

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