The Tort of Negligence and Caparo Industries Plc v Dickman PDF

Preview

Summary

This document discusses the massively important case of Caparo PIC v. Dickman and how this test devised the legal test for duty of care.
Also listed are some critiques of the test. Perfect for building essay questions....

Description

The Tort of Negligence and Caparo Industries Plc v. Dickman

The tort of negligence arises from the landmark case Donoghue v. Stevenson [1932], from which branched the four requirements for an act of negligence in law to be established. These four requirements are as follows: 1. 2. 3. 4.

The defendant owed a duty of care The defendant was in breach of that duty The breach caused damage, and The damage was not too remote

What is a Legal Duty of Care? The legal test that imposes a duty of care on a defendant is the Caparo Test, which comes from Caparo Industries PIC v. Dickman [1990]. This test requires that: 1. The harm caused was reasonably foreseeable 2. That there was a relationship of proximity 3. That it is fair, just and reasonable to impose a duty of care

Background of the Case Caparo Industries PIC v. Dickman is a landmark case which established the Caparo test. This test differentiates from the legal principles that Donoghue v. Stevenson and form the test that originated from Anns v. Merton London Borough Council, which is the assumption that there will be a duty od care where harm is foreseeable, unless there is good reason to think otherwise. The way that Caparo differentiates is that it starts from the assumption that there is no duty of care owed unless the three stages of the test are fulfilled. However, this new approach has not been free from criticism, as many believe this three-pronged test overcomplicates the simple neighbour principle derived from Donoghue v. Stevenson.

Facts of the Case Caparo Industries purchased shares in Fidelity PIC because they were confident in the accounts which stated that the company had made £1.3 million pre-tax profits. However, it came to light that Fidelity had actually made a loss of £400,000. Caparo brought legal action against the auditors of the accounts, saying that they had been negligent in certifying them.

Judgement No duty of care was owed to Caparo Industries. Because there was not sufficient proximity between Caparo and the auditors, they did not owe them to have the accounts done perfectly, as the auditors were not even aware of the existence of Caparo, nor the fact that they were using their accounts....