Caparo Industries vs Dickman - Assignment Example

of the Law of the Concerned 13 January Caparo Industries v. Dickman (1990 Interpretation of the Three Stages of the Test Within the English Tort Law there exists the provision as per which, an individual may owe some duty of care pertaining to another individual, so as to protect that individual from suffering unreasonable harm or loss. In case an individual tends to violate the duty of care imminent on one, the court imposes a legal liability on the offender so as to compensate one for the losses or harm suffered by one. This provision tends to be a leap ahead of the Common Law that hitherto considered such duty of care to be imminent in case of contractual arrangements only, while this provision makes way for the legal premise that in some instances the individuals may also owe duty of care to the complete strangers. It was actually in Donoghue v. Stevenson, in which the concept of duty of care was significantly and formally conceptualized and developed. Hereby the court of law established some concrete tests which ought to be satisfied so as to establish the duty of care. However, it was actually in Caparo Industries v. Dickman that happens to be a prominent British Tort Law case, in which a tripartite test for establishing the duty of care was set up (Cane 1996). Dickman happened to be the auditors of the accounts of the company Fidelity plc, while Caparo Industries happened to be a company that purchased the shares of Fidelity plc. After purchasing the shares of Fidelity plc, Caparo Industries found out that the accounts prepared by Dickman at no time indicated or showed that the firm has been running into large losses. It needs to be mentioned that before Donohue v. Stevenson, the claimants had to verify the existent duty clause to achieve success. In contrast, the subsequent cases tried to organize and limit the tests given by Donohue v. Stevenson. Caparo Industries v. Dickman was a step in that direction. The court established that in case of Caparo Industries v. Dickman, for the emergence of care to arise in the cases of negligence, the three essential criteria needed to be verified: 1) As established in Donohue v. Stevenson, the harm that occurred needs to be foreseeable as a direct consequence of the defendant’s conduct. 2) There should be a relationship of proximity between the two involved parties. 3) The imposition of liability needs to be reasonable, fair and just. Over the years the courts have interpreted the tripartite test extended by Caparo Industries v. Dickman in a variety of ways. There is no denying the fact that human relationships tend to thrive under the aegis of a large and wide range of situations and circumstances. Hence, the very establishment of duty of care in any particular case may give way to many confusions and variations. Traditionally speaking, the law has always tried to verify and establish the duty of care in a range of circumstances, each and every circumstance being incumbent to its own specific characteristics and peculiarities. However, this practice has lead to the creation of a whole body of duty situations all of which happen to fall within the set of Tort of Negligence. No wonder many of such cases require their own unique variety of tests to establish the duty of care. Hence, there has come into existence an immense demand for the establishment of a single, viable test which needs to be applicable under all circumstances to establish the duty of care. When it comes to the interpretation of the three stages of the test forwarded by Caparo Industries v. Dickman, one needs to take into consideration the case of, Kapfunde v. Abbey National plc (1998). In this particular case the appellant filed a case against Abbey National Plc for damages. So far as the details of this case are concerned, Dr, Daniel was hired by Abbey National plc as an occupational health advisor. The appellant applied to Abbey National plc for the post of a cashier. As a consequence one was required to complete the company’s standardized and confidential medical questionnaire. On the basis of the information and medical history provided by the appellant in the given questionnaire, Dr Daniel advised the company that the appellant, going by one’s medical history and the personal medical information provided by one, was not suitable for employment in the company. Consequently, Abbey National plc refused to employ the appellant. Hence, the appellant sued Abbey National and Dr. Daniel for negligence. The appellant charged that Abbey National was directly responsible for the actions of Dr. Daniel, which led to him being not hired. The honourable court ruled that though Abbey National had employed Dr. Daniel as the occupational health advisor, the company was in no way in proximity to the working of the doctor to be able to influence the professional opinion furnished by the doctor to Abbey National. The court also ruled that though Dr. Daniel did conduct the pre employment medical assessment of the appellant, he owed no duty of care to the appellant and only did what was required by him to do in the light of his professional responsibilities. The court also ruled that it was not just, fair and reasonable to impose such a duty of care on Dr. Daniel. Hence, in Kapfunde v. Abbey National, the court was able to decide upon this case by interpreting the tripartite test furnished by Caparo v. Dickman in its true spirit and intention. Hence, it does need to be mentioned that Kapfunde v. Abbey National plc to a great extent elaborated on the requirements of proximity and justice, fairness and reasonableness, enunciated by Caparo v. Dickman, thereby not only validating the tripartite test enunciated by it, but also pragmatically exhibiting its ramifications in actual practice. The other important case that is indicative of an important interpretation of the tripartite test furnished by Caparo v. Dickman is Law Society v. KPMG Peat Warwick (2000). The claimants in this particular case happened to be the Law Society. The solicitors hired the defendants that are a firm of accountants to draft their annual reports which in consonance with the Solicitor’s Act 1974 was to be submitted to the Law Society. One primary purpose of this law was to help the authorities identify as to whether the solicitors were mishandling the client’s funds. This in a way allowed the Law Society to intervene and to utilize their funds so as to compensate those clients who suffered owing to the dishonest handling of the funds by solicitors. In this particular case the Law Society claimed that the auditors were negligent in the contriving of their auditing duties owing to which some clients had to suffer owing to the dishonesty of some solicitors, who were later compensated by the Law Society. In this particular case the Law Society happened to be defined as a third party to the actual relationship between the solicitors and the auditors. Yet, the court of law gave the verdict that the defendants that are the auditors do owe a duty of care to the Law Society because the defendants were well aware of the purpose for which they were required to prepare the audit reports. Hence, the court held that going by the awareness of the defendants regarding the purpose for which they were required to prepare the audit of report; the losses suffered by the Law Society were a direct consequence of the actions of the defendants that are the auditors. Going by the same premise, the court held that there was a relationship of proximity between the defendant and the appellant. Hence in the light of the Caparo v. Dickman the court concluded that the imposition of duty of care to the Law Society by the accountants was just, fair and reasonable. The hallmark of the Law Society v. KPMG Peat Warwick is that it not only brings to fore the point that the fixing of the liability for the duty of care in actual socio-economic scenario with its imminent complexities and nuances is utterly complicated and intricate, it also testifies to the accuracy and scientific credentials of the tripartite test laid down by Caparo v. Dickman. In case of Caparo v. Dickman the very nature o f the losses incurred owing to a negligent statement happened to be economic. Hence House of Lords did manage to establish that though it was quiet foreseeable that the investors may rely on the published account statements to arrive at on the ground investment decisions, the accountants who drafted such account statements could not be deemed to be directly responsible for the losses incurred to these investors. That was because there was scarcely existent any proximity between the accountants preparing the account statements and anybody who was to rely on these statements. However in the case of Law Society v. KPMG Peat Warwick the tripartite test furnished by Caparo emerged to be distinguished in the sense that the court held that the auditors did hold a duty of care to the Law Society as the auditors were well aware that the Law Society was to rely on the statements complied by the accountants to identify the solicitors who were dishonest and were mismanaging the funds of their customers. It goes without saying that in a practical context, it sometimes gets really difficult to ascertain the duty of care in socio-economic circumstances that are open to a range of duties, expectations, laws, restraints and flexibilities. Hence, as one could directly deduce from this statement, though the tripartite test furnished by Caparo v. Dickman may appear simple on the surface, in practical terms many a times it gets really difficult to establish the duty of care in a court of law. Yet, the beauty of this test has been that it had been able to render just and fair decisions in many complex and complicated tort cases. For instance in Harris v. Evans (1998), the court of appeal was able to deduce as a direct application of this test the conclusion that the Health and Safety Executive did not owe duty of care towards an individual who suffered losses owing to the exercise of its statutory duties. Till the law confabulates a more fool proof test for ascertaining the obligation of duty of care, the tripartite test facilitated by Caparo v. Dickman is sure poised to meet the requirements of the law and justice in the times to come, being open to flexible interpretations. Reference List Cane, P 1996, Tort Law and Economic Interests, Clarendon Press, Oxford. Read More