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Caparo Industries plc v Dickman

[1990] 2 AC 605 · [1990] UKHL 2

House of Lords · 1990

Good law
NegligencePure economic lossAuditors' liability

Headnote

Set out the threefold test for a duty of care in novel cases: foreseeability of damage, proximity of relationship, and whether it is fair, just and reasonable to impose a duty.

Bench

Lord Bridge, Lord Roskill, Lord Ackner, Lord Oliver, Lord Jauncey

Facts

Caparo relied on audited accounts when making a takeover bid and claimed the auditors were negligent in certifying the accounts.

Held

No duty was owed to a bidder relying on statutory audit accounts; the requisite proximity was absent.

Key passage

“What emerges is that in addition to the foreseeability of damage, necessary ingredients in any situation giving rise to a duty of care are that there should exist between the party owing the duty and the party to whom it is owed a relationship characterised by the law as one of proximity or neighbourhood.”

[1990] 2 AC 605, 617-618 (Lord Bridge)

Citation formats

OSCOLA

Caparo Industries plc v Dickman [1990] 2 AC 605 (HL) 617.

Neutral

Caparo Industries plc v Dickman [1990] UKHL 2.

Short form

Caparo (n 1) 617.

Authorities considered